Opinions Brooke Thackray
The Real Estate Select Sector SPDR FundXLRE-USPAST TOP PICKAug 31, 2022
(A Top Pick Mar 21/22, Down 8%) Top holding is AMT. Another big one is PSA. So its offerings are more specialties, which we don't have in Canada. Seasonality is March to September.
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BUY
Bought it yesterday. Public REITs will see a mean reversion for a discount valuation vs. private markets in 2023. If there's a recession, there will be a lot of M&A, driven by private equity cash wanting to do deals. XLRE will take advantage of this mean reversion. Public REITs have outperformed private RE in the last several recessions and following four quarters of each.
Joe TerranovaOwned
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TOP PICK
Part of rotating to defensive sectors. The real estate sector has done very well. REIT's trade with the state of the economy and are affected by interest rates. The sector is more co-related to the business cycle. It typically does well until September but the upside this time may not last until then.
Brooke ThackrayOwned
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DON'T BUY
Good momentum. Basket of commercial, residential, storage, and so on. Issue is the expensive valuation. Another way to play it is to look at the US homebuilders, such as ITB, his preference, which also has a home renovation component. Supply/demand dynamics speak to years and years of home building.
DON'T BUY
We've seen the bounce from March 23, but they haven't performed well since then. There's lack of visibility on the future. Until we get past Covid, it's not his favourite sector. It has structural headwinds against it. People are out of work, and we haven't had the wave of bankruptcies yet. Better places to look.
BUY
Crown Castle and American Tower represent 20% of this ETF; this is the whole 5G craze, since they own the towers needed for 5G. No problems holding this. He has no worries.
PAST TOP PICK
(A Top Pick Sep 12/18, Up 20%) He still likes being in this. A real steady grower. If you think 10 year rates stay around 2% this will be good to hold. If interest rates go up, this will be a tough hold. He thinks slow growth or a modest recession is likely, so holding this is good. If economic growth accelerates, selling of real estate will accelerate too and he would be forced to sell out.
Cameron HurstOwned
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TOP PICK
The risks will be if interest rates go up or if economic growth accelerates. Otherwise a good holding for a sideways growth market. Yield 3.16%
Cameron HurstOwned
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COMMENT
PAST TOP PICK
(A Top Pick Aug 07/18, Up 16%) The 1.5% ten year yield has benefited this one. Rent levels can continue to grow. He continues to be focused here.
Cameron HurstOwned
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TOP PICK
He likes the outside exposure to data centres and towers. This opens the door to participate in 5G. Yield 3.27%
Cameron HurstOwned
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