iShares S&P/TSX Capped REIT Index ETF (XRE.TO)

This holds about 25% of RioCan (REI.UN-T). He is always a little bit hesitant with REITs and he doesn’t hold many right now. This is because of the interest rate sensitivity. He is not anxious to be buying any right now. There are other income options he prefers.

REITs are a good play in the summer. Usually you get falling rates during the summer. Investors want to be less correlated and reduce their risks to equities, and often trend towards the bond markets. From March to May is the 1^st period of seasonal strength for REITs, and then June through August is the next period. This one is heavily weighted into 2 securities, so if you want more of an equal basket, there is BMO Equal Weight REITs Index (ZRE-T).

Any of the REITs are affected by interest rates because they are predicated upon giving a better return, so this would drop if interest rates went up. This one really depends on what you think about RioCan (REI.UN-T) because this is about 25%-30% of that. He thinks an ETF for REITs is certainly the way to go. As we are getting close to rates going up, he is not that thrilled with REITs.

About 25% RioCan (REI.UN-T). RioCan was very clever in the way they dealt with the Target (TGT-N) leases because they got the covenants from Target US. It depends on whether you want this because of RioCan holdings or if you prefer the equal weighted REITs (ZRE-T) from the Bank of Montréal. In either case, he has Sold them both. He was a little concerned about interest rates going up and he had a large enough gain that he just wanted to do something else.

A good way to go. A great way to stay diversified within the REIT sector. It is equal weight.

There are 2 headwinds for REITs. The fear of higher rates and how is the economy doing. The chart on this shows a peak in early 2013 followed by a correction in mid-2013. It is now slowly rallying back. He doesn't think the sector is going anywhere. Doesn't think you will get hurt. The thing with REITs that there was a rush for yields and he thinks that has gone a bit too far. He would be careful on this.

He has abandoned the REIT market in Canada. It has been a terrific part of the market from the standpoint of growth and yield. In a rising interest rate environment, it is going to be a bit problematic. Doesn’t like Canadian REITs as opposed to US REITs because Canadian ones tend to be dominated by shopping centres.

(A Top Pick July 4/13. Up 8.6%.) Interest rate sensitive ETF’s really got hit last May. Most of his clients don’t have this any more as they have been pulling out of real estate. Feels real estate, of all manners, is starting to get frothy now.

Market weighted. Prefers ZRE-T and thinks it will perform better because of how it is weighted.

Interest rate sensitive stocks started to perform poorly when the FED first talked tapering. In 2014 we will see interest rates tick up a little, so this one will be range bound.

Should he sell and buy an individual REIT, which could provide better future value? The disadvantage of this ETF is that it is a passive index, and you are just buying a group of 14 REITs. If you look at one of the Top Picks, he expects they will give you outsize returns going forward.

It is about 20% REI.UN-T. Nothing wrong with that. ZRE is equal weight. It depends what your view is on REI. Hold if it fits your income requirements but don’t go too heavy on it.

This one has dropped a lot in the last couple of months so this is a buying opportunity. If you think there are going to be more rate hikes and that REITs are going to be hit, maybe you should stay away, but if you have courage that the market has now priced a rate hike in, this has to be the best buying opportunity that you have seen in years.

REITs getting hit because of sensitivity to interest rates when they have to re-finance. The volatility offsets the yield. It’s on his radar but he is not stepping in now.

Likes the product but not the asset class. It has plateaued and most of his clients already have a home.