Opinions Andrew Moffs
iShares S&P/TSX Capped REIT Index ETFXRE.TOSELLJan 28, 2021
Stock price when the opinion was issued
As of May 29, 2026. Market Open.
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REITs are difficult. If you have a very low cost base and have to pay tax on selling, figure out how you want to work yourself out of it over a couple of years. Growth will be challenging.
For alternatives with real estate exposure, you might want to look at some of the banks or a bank covered call ETF. Take a look at ZEB.
Challenging to own REITs in Canada. The 5-year return is slightly negative, even including dividends. Some names in it make sense, some don't. Cumulative inflation has hurt REI.UN, the second-largest holding. Softness in Canadian economy.
5- and 10-year yields are moving higher, and REITs are very sensitive to higher rates because of their debt. REITs might make sense in a stronger economy, with rates moving down.
And REITs outside Canada? Always a good choice if you want broad exposure to Canadian real estate. CAP REIT is the biggest holding, which he really likes, as well as H&R and Riocan REIT (also likes it). However, XRE is concentrated in these names, so you may be better off picking specific names that offer better growth. To answer: Outside Canada, you can look at VNQ and IRR in the U.S. that covers the U.S. REIT market. The US REIT market has more specialized sectors, like towers and data centres.
We’ve all fallen in love with income investing because interest rates are so low, so everybody is looking afield for income. He would caution people to not just stick to Canada, but also look further afield. This ETF has done incredibly well. As interest rates have declined, there are some issues in terms of Cap Rates etc. If an income investor and looking for higher income, he would look to something else such as the emerging-market bond complex such as iShares Emerging Markets Local Currency Bond (LEMB-N). It has a little higher yield.
He'd move on. There's a 48% spread between the top and bottom quartile performers. Can't capture the upside with an ETF. Better to focus on the winners, and avoid the losers. CAR, HOM-U, WIR-U, and Granite are great choices. Look for growth, and at a discount is even better.