BMO Equal Weight REITs Index (ZRE-T)

Down 11.4% over the last 12 months. Underperformed the TSX since early days of the pandemic. Interest rates moving higher is not conducive for REITs to perform well. How healthy is they real estate market in Canada? Macro environment not favourable, especially in Canada. Still uncertainty ahead. Yield is 4.9%.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. In a recovery scenario, there is a long term potential for good returns. You should look at a 3+ year horizon. It is not risk free. Unlock Premium - Try 5i Free

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. In the current state of REITs, ZRE is an equal weight ETF that reduces single company risk. A good choice for the sector today. Unlock Premium - Try 5i Free

XRE-T showed the experience of the REIT sector in a bad economy. Interest rates are going lower and lower. REITs are typically one of the last things to drop. When the baby gets thrown out with the bathwater, REITs go down also. The pullback last week is the first part of a short term trade you could do but it would not be for a long term hold.

VNQ-N in the US is a read on the index in the US. It has been in a pretty reliable trading range for a year or so but we broke out of it. Then look at ZRE-T and it is a different picture. There is much more risk in the Canadian REITs here. Even with a dovish rate increase he does not think you want to buy it here. You need a more significant dip here to buy it. He prefers below $19.

He likes it when the risk adjusted returns are attractive. Friday he sold REITs in his dividend fund. If it gets below $18, it would be attractive again because of the yield.