The residential-housing market dropped first, followed by U.S. commercial-real estate stocks due to the spread of mortgage woes. Now investors are looking to invest in overseas properties, and some are looking at using exchange-traded funds, which can be a good or bad thing, according to The Wall Street Journal.
There are several ETFs that can give investors exposure to overseas real estate, and they are not without risk, as the credit crunch is being felt globally. Real estate stocks worldwide might experience increased volatility as investors try and grasp the extent of the damage in the mortgage market. Fears in the mortgage market have affected financials and real-estate companies.
SPDR Dow Jones Wilshire International Real Estate ETF had been holding up relatively well until liquidity fears really started to shake markets last week. It was off 9.9% year to date through Aug. 17.
State Street Global Advisors launched the first ETF tracking foreign real estate stocks in December 2006, and it has performed well, recently breaking $1 billion in assets.
Recently, the fund met some competition; in June WisdomTree Investments launched WisdomTree International Real Estate Fund on the America Stock Exchange with fees of .58%.
This month Barclay’s Global Investors partnered with iShares S&P World ex-U.S. Property Index Fund, which charges .48%, and trades on the New York Stock Exchange.
There aren’t a lot of options or alternatives for international real estate for the investors on the street,” said Bruce Lavine, chief operating officer at WisdomTree. “Investors have had a good run with domestic real estate, but now the international market is looking cheap relative to the U.S.”
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.