iShares S&P/TSX Capped REIT Index ETF (XRE-T)

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.

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.

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.

The run up from $24 was impressive for D.UN-T. He does not own individual real estate -- he holds XRE-T instead. He would like to see it consolidate at these levels for a while before buying.

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.

REITs. We are basically coming up to resistance. He does not think we will break through there. He is selling REITs and is almost out. The dividend is not as attractive as in some other sectors. He would buy REITs if they got back to their lows. If there is a cyclical recession in the next few years, then REITs will underperform in that kind of environment.

Hasn’t owned this for a while, because it is dominated by 2 companies, RioCan (REI.UN-T) and H&R Real Estate (HR.UN-T). He tends to be careful on any kind of ETF that has 20% or more of one company, you might as well just buy the stock. The emphasis of RioCan is really on Canadian shopping centres, and he doesn’t expect much to happen on the shopping centre side. Prefers the iShares Dow Jones Real Estate (IYR-N) which has a really nice array of properties, and it is spread out all over the US.