Opinions
Larry Berman CFA, CMT, CTA
Vanguard FTSE Cdn Capped REIT
VRE-T
BUY
May 05, 2025
Stock price when the opinion was issued
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As a play on the housing market? Doesn’t know if there is a lot of difference between this, iShares S&P/TSX Capped REIT (XRE-T) and BMO Equal Weight REITs Index (ZRE-T). They all seem to have much the same components. It all depends on how much RioCan (REI.UN-T) you want, but there is nothing wrong with having this. He takes a look at the costs and takes the cheapest.
Is this a good one to play housing? One of the concerns that everyone has to have when looking at any REIT is that if interest rates are rising, that can slow down real estate. A reasonable Buy today but you have to bear in mind interest rates could negatively impact this. If he were doing it, he would just buy RioCan (REI.UN-T).
This will be based on whatever you think real estate is going to do over the next year. You have interest rates continuing to be low and unlikely to rise significantly over the next year. You have a US Fed chairman who has all but told us that we have a prolonged period before we see interest rate hikes.
VDY vs. VRE when buying dips We just had a dip on Friday and you have to pounce on them. It's hard. You need to find a stock that trades in a channel, then buy when it hits the bottom of that channel. The TSX is weighted in the VDY. He prefers VDY given the underperformance of Canadian banks in VRE.
CGR is a global REIT play. ZRE is an equal-weight REIT play. VRE is market-cap weighted.
There isn't a right way, one's not better than another. Looking back in history, in Canada the equal weight has been better than market-cap weighted. That's as a result of some of the smaller REITs doing better than some of the larger ones. Domestic REITs have better tax treatment than global ones. So it depends on whether you're investing in a Canadian taxable account or not. There are a lot of great global REIT dividend plays, but you have to consider the foreign withholding tax.
Any one of these is a great vehicle, but which one will depend on an individual investor's need for exposure and tax situation.