BMO Equal Weight REITs Index (ZRE.TO)

REITs are little bit on the cheap side compared to world indexes, but he does not think they are good value. The interest rates going into next year are too high. He does not like the market risk overall. He likes the sector for the dividend, but not for the total return. It is attractive if you don’t mind the volatility risk short term.

(Market Call Minute.) He generally thinks that REITs are great. Have increased recently, but have been undervalued for a long time. Feels they may pull back in the short term, and he would Buy on the dip.

Equal rate REIT ETF. He has said for the last year and a half that they had downside risk, but now he is at maximum position in REITs in his dividend fund. In the last month or so he has been adding every time it has been getting weak. This is one of the ones he holds.

REITs. Real Estate fundamentals are solid in most office and commercial properties. There is some stress from the energy sector. His max exposure is 12.5% in his funds. Today he is at that level because he sees a lot of relative value.

RioCan (REI.UN-T) or BMO Equal Weight REITs Index (ZRE-T)? They are not too different. This has relatively large weightings in some of the large REITs, and they all tend to move in the same direction when the sector sells off. While he likes RioCan very much, he thinks this one is a little bit better because it is a diversified basket.

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. The chart on this one shows the rising trend line pushing up towards resistance, and eventually you would expect a break out, which is a bullish resolution.

When you look at the real estate market, you want to look at where interest rates are moving. In Canada we had a bit of a curve ball with the interest rate drop. REITs are still looking somewhat attractive to yield hungry investors. This particular one gives you a pretty decent yield in the 3%-4% area. Watch for when rates eventually start moving higher.

REITs. ZRE-T which is equally weighted is his preference. It is starting to get interesting to him on a risk adjusted basis. He wants to buy more if it gets lower because he likes the dividend.

(Top Pick Sep 26/13, Up 11.14%) At that time he felt there was risk of a rate increase further.

This sector is going into a correction phase by mid-next year.

Prefers that it is equal weight. That is the way to go. They will outperform cap weighted ETFs. REITs can still refinance at great rates. This whole interest rate thing has been way over done for REITs here.

Had an almost 20% decline since May 22. Thinks about 90% of the correction is done, but he would wait a few months before adding to holdings.

REITs should be a part of any portfolio where someone is trying to get yield. It is a reasonable valuation at this point so it is okay to nibble away. Go to a half position. If we pull back 5% then up your position to 10%. There are risks if interest rates rise over the next few years.

This is somewhat dependent upon rates. Interest rates and mortgage rates, which have been going up in the past 2-3 months. This one is a real estate investment trust, not as mortgage dependent, but in the past 2-3 months as rates have started to go up in the long end, the value of real estate investment trust products have dropped fairly precipitously. Doesn’t know if it will drop much further but doesn’t think it will do that well going forward. Thinks real estate is in for a rough ride for the next 2-3 years.

If you stick with real estate on the longer-term basis, you’ll probably do just fine. If he were doing real estate, he would just go for one of the bigger names, and in this case that would be RioCan Real Estate Investment (REI.UN-T). This way you can forget about paying the extra fee for an ETF to manage an equal weight model. This gives you a monthly income.