Beating inflation with a short-term REIT ETF

Simon Brown ETF Blog, Latest

I was chatting with Kyle Wales from Flagship Asset Management about investments that do well as inflation remains high and he had some interesting ideas and proposed this short-term REIT ETF. You can listen to the interview below.

Now inflation is starting to fall in most economies but we’re still a long way from normal or target inflation levels.

Gold is one asset that many like to hedge against inflation and you’ll find our review of local and offshore gold ETFs here.

But REITs typically do well as they have pricing power, but the point made by Kyle is that many leases may be longer in nature and escalations may not capture all of the inflation.

So short-term REITs such as storage, hotel and residential property are really best suited. The idea is perfect as the leases here are usually twelve months at the longest so renewals can fully capture any inflation.

Locally we have some JSE listed REITs that fit the bill (StorAge* being one that I hold). But for a global view, this ETF focuses on just this space.

Simon Brown

ETF issuer Nuveen
Issue date 19 December 2016
Total investment cost 0.35%
ETF Benchmark Dow Jones U.S. Select Short-Term REIT Index
Tax-free savings account NO
ETF major holdings Host Hotels & Resorts Inc
Mid-America Apartment Comm
Sun Communities Inc
Camden Property Trust
Equity Lifestyle Properties
Market cap US$88.8million
Performance 1 year -17.8% (ex distributions)
Performance 3 years +2.3% (ex distributions)
Performance 5 years +6.5% (ex distributions)
Dividend yield 3.3% (paid quarterly)

ETF blog

At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.