Buying real estate funds abroad: VNQI
I spent the week without posting because my last days have been very hard.
Today I will tell you a bit about my international portfolio.
I put 90% in stocks and ETFs and 10% in REITS (thinking of putting 10% between gold and bitcoin and lowering to 80% the stocks) that are what real estate funds are called abroad, in fact, a REIT is a stock REITS can be gigantic companies with thousands of real estate, can make big debts, leverage much more, and so on. Finally, know that a REIT is a company that works with real estate, lease, sale, construction and not only with commercial buildings, colleges, hospitals, shopping malls as we see here.
A REIT can be as complex as industrial plants, data center, nursing home, entire hospital groups, garbage dumps, recycling plants, and so on. It is a true world to be harnessed for those who want to study and invest in it abroad.
As I am new, my allocation abroad is more concentrated in same stocks, which are those of non-real estate companies, more focused on passive index ETFs and preferably without the distribution of dividends to be no longer taxed. Fixed income abroad is laughable, Europe is paying negative interest or zero, the US pays up to 3% a year, but it almost ties in with inflation there, and it was the tax if I do not like the RF in Brazil Imagine abroad.
Reits are real assets, and that’s what I’d rather invest.
Just look at the countries that have REITS to invest and the year it started:
The downside of investing in reits for us is to pay 30% tax on the dividends received. Although they pay far fewer taxes to the governments there than ours pay for the government here. Anyway, the tax disadvantage of investing in REITs is very large, so I do not think it’s worth concentrating too much on the overseas portfolio in reit. Investment in this type of asset may not be as profitable in the long run as equities, but it is still a real, stable asset and less subject to sharp price fluctuations. This is an advantage, that of reducing portfolio volatility.
There are those who prefer to study REITS, read books and reports and build their own reits portfolio. For me, I do not think it’s worth it, it would be a lot of work for little meat, because I’m investing only 10% of the international portfolio in this, and it’s worth 50% of the total portfolio, which gives 5% of the overall total. In order not to suffer much I divided into two assets, the SCHH and the VQNI. SCHH is an REITS ETF investing in REITS located in the USA. The VNQI invests in reits scattered around the world as I will show (but does not invest in the US, it is “ex-US”) – When something says it is “ex-US” it is because it is outside the US and so on.
If you want to check the VNQI page at Vanguard click here: https://personal.vanguard.com/us/funds/snapshot?FundId=3358&FundIntExt=INT
The first thing you have to know about VNQI is what index it invests in and what the index methodology is:
Invests in stocks in the S & P Global ex-U.S. Property Index, representing real estate stocks in more than 30 countries.
The index is the S & P (from Standard and Poor’s) that you can consult here http://us.spindices.com/indices/equity/sp-global-ex-us-property-us-dollar
The idea of investing in REITs is to expect a better return than bonds and worse than stocks (in the long run talking) and be an investment in real assets as well.
I’ve cut a few bits that I think are important to talk about VNQI.
These are the main countries where VNQI invests:
In the chart below we can see the general allocation on the various continents and some fundamentalist indicators, note that there are 670 companies, excellent diversification.
The P / E is in 12.2
The P / B is in 1.1
EGR rate 10.4%
At the moment I consider very good metrics.
The management fee for this ETF is only 0.15% per annum, very low and very good for us sardines.
Below is a comparative graph of VNQI with the SP500 from the last 10 years.
Remembering that the SP500 has done very well over the last 10 years.
Here is a small comparison of vnqi with vnq. VNQ is Vanguard’s reit ETF in the US as I’ve already said. It has better numbers than the VNQ, but it is also more expensive because, as Friedman said, “there is no free lunch”. Note that VNQ is performing much better than VNQI, but like the SP500, VNQ has a very good time in the US that has been the last 10 years (the post-crisis 2008), and we know that after a Very large crisis markets are recovering a lot, taking the indicators to very high levels that might not have been as rocky if there had not been a previous crisis.
My choice of SCHH over VNQ is that SCHH has a lower yield and a lower administration rate, but they invest basically in the same reits index.
It is a pity that there was no real estate fund in Brazil with a low management fee and that all other funds were bought to mirror the market.
That’s all folks! Introducing a new product.