We had written an article titled “Invest (some) in International Real Estate !!!!” back in December, 2007. This post is a sequel to that.
With the collapse of the housing market in the US,UK and to some extent other European countries it sounds weird to talk about real estate investment.But some real estate stil needs to part of one’s diversified portfolio.It can be as small as 5 to 10% of the portfolio.
One easy way to get exposure to real estate in other countries is by picking up a fund. We will discuss one such global fund called the ING Clarion Global Real Estate Income Fund (IGR). This is a closed-end fund but shares are traded on a daily basis.
Fund Details:
Name: ING Clarion Global Real Estate Income Fund
Ticker: IGR
Current PPS: $16.68
Dividend Yield: 9.80%
Total Net Assets: $2.5 B
Premium/Discount: 5.9%
Why invest in IGR?
- Gives international real estate exposure easily.
- Well diversified geographically and by property type.
- Has only 51% of the assets in the US. Rest of them are invested overseas.
- Residential stocks make up only 9% of portfolio.
- Has a little dab of fast growing economies like Brazil,Asia.
- High Monthly dividends and long-term capital appreciation
- With dividend reinvestment option, yield can easily exceed 10% per year
- Net Assets of over $2B
- Run by ING, a global leader in Financial Services
Note: All data as of March 31,2008.
Analysis:
IGR has been a great fund since its launch. From 2004 till November,2007, the market price of the fund more than doubled from $12 a pop.After that peak, the stock went down as low as $14 before moving up to $16.68 today. We would suggest that IGR is an excellent buy at any price below $15.
5-Year Chart
There are a total of 119 stocks in this fund which includes both common and preferreds.The top 10 holdings account for 29% of the portfolio.Some of the companies in this top 10 list includes Rio Can of Canada, Westfield Group of Australia,Land Securities of UK. Other notable companies in the portfolio are CapitalLand of Singapore, British Land of UK,Prologic of US,Brascan of Brazil.The fund has 0.4% in Unitech of India. India’s housing market bubble has burst and now prices are going down.
Anyone looking for a monthly cannot afford to miss this fund.With a yield of 9.8%, this fund easily beats the S&P; Index yields and Equity REITs. The fund has returned an average of 11.95% since inception – which is not bad.An investor may want to pick up IGR and a couple of other REIT funds like RWX,RWO,WPS,etc. IGR is a long-term value investment.While in the short term it will fluctuate, if held for a minimum of 5 years it may give great returns when compared to other investment options.
Tidbit:
Here is a posting by “nutodaboard” from Yahoo Message board on Feb 15,2008: “I invested $15,000 almost 4 years ago and now the total is $26,340. That means a profit of $11,340. Divide the $11,340 by 4 and that comes to an average return of $2,835. $2,835 divided by $15,000 comes to 18.9%, which is the average rate of return on my original investment the way I figure it.“
Important Note:
The above message may or may not be true.Do not depend on online messages to make investment decisions.Do your own DD before putting money into any investment.
Links:
http://www.ingclarion.com/INGClarion/Clarion+RE+Securities/ClosedEndFunds
http://www.ishares.com
