ETFs
Canadian REITs – The Vanguard REIT ETF brings cost relief
In Canada, our REIT ETF choices have been limited.
The iShares REIT product is ‘the gorilla’ in this arena with Assets under management (AUM) of approximately 1.4 billion dollars. The younger BMO REIT ETF has been steadily growing, but only has about a quarter of the assets that the iShares product has.
These two companies had better look in the rear-view mirror, because Vanguard Canada now has a REIT ETF that is very enticing.
Why? The cost. This ETF has a Management Expense Ratios (MER) of only 0.35 %
| Canadian REIT ETF | Symbol | MER | Yield |
|---|---|---|---|
| Vanguard FTSE Canadian Capped REIT Index ETF | VRE | 0.35% | t.b.a. |
| BMO Equal Weight REITs Index ETF | ZRE | 0.55% | 5.41% |
| iShares S&P/TSX Capped REIT Index Fund | XRE | 0.60% | 4.58% |
In the past, some investors have scoffed at the price (0.60%) of the REIT ETFs and have ventured alone, selecting two or three individual company REITS to add to their portfolio. However, most investors would be better served by purchasing a REIT ETF, to provide better diversification of REIT companies.
Conclusion
The Cost advantage cannot be ignored.
The Vanguard REIT ETF started trading in Nov 2012. This ETF will gain a larger slice of the Canadian REIT ETF market, as investors discover the cost advantages of this product.
Individual REIT companies
For those investors interested in digging further, check out this link for a complete list of all the Canadian REITs on the TMX stock exchange.
The table below shows the percentage breakdown of each individual REIT that is held within each ETF. It is interesting to see how each ETF methodology weighs the individual REITs.
| Vanguard | BMO | iShares | |||
|---|---|---|---|---|---|
| Company | Ticker | VRE* | ZRE | XRE | Yield |
| RioCan Real Estate Investment | REI.UN | 16.3% | 5.5% | 20.7% | 5.12% |
| H&R Real Estate Invest. Trust | HR.UN | 9.4% | 5.3% | 11.6% | 5.38% |
| Dundee REIT | D.UN | 7.2% | 5.3% | 9.2% | 6.08% |
| Calloway REIT | CWT.UN | 6.2% | 5.5% | 7.3% | 5.48% |
| Boardwalk REIT | BEI.UN | 6.2% | 5.8% | 6.5% | 2.98% |
| Brookfield Canada Office Prop. | BOX.UN | 12.7% | 6.0% | 3.94% | |
| Cominar REIT | CUF.UN | 5.6% | 5.0% | 6.6% | 6.56% |
| Canadian REIT Income Fund | RIU.UN | 5.9% | 5.6% | 4.98% | |
| Cdn Apartment Prop REIT | CAR.UN | 5.1% | 5.5% | 5.9% | 4.68% |
| Primaris Retail REIT | PMZ.UN | 5.2% | 5.4% | 5.4% | 5.32% |
| Cdn. Real Estate Investment | REF.UN | 7.3% | 3.58% | ||
| Allied Properties REIT | AP.UN | 4.0% | 5.9% | 4.9% | 4.22% |
| Chartwell Seniors Housing REIT | CSH.UN | 3.7% | 6.1% | 4.6% | 5.24% |
| Artis REIT | AX.UN | 3.4% | 5.3% | 4.6% | 6.90% |
| Crombie REIT | CRR.UN | 5.6% | 2.0% | 5.99% | |
| Northern Property REIT | NPR.UN | 5.1% | 2.6% | 4.98% | |
| Morguard North American REIT | MRG.UN | 6.0% | 5.45% | ||
| Dundee International REIT | DI.UN | 5.7% | 7.48% | ||
| InnVest REIT | INN.UN | 0.8% | 5.1% | 9.24% | |
| Morguard Real Estate Inv Trust | MRT.UN | 1.7% | 5.31% | ||
| First Capital Realty Inc. | 3.1% | ||||
| FirstService Corp. | 1.6% | ||||
| Extendicare Inc. (US) | 1.3% | ||||
| Melcor Developments Ltd. | 0.4% |
[Update Dec 06, 2012: There was a buyout offer for Primaris.]
