The Stocks Inside The Most-Searched Global Real Estate ETFs

For a look of what we’ve done so far in our October Housing is Haunted series, see The Juice from last Thursday. It contains a list of this month’s installments on housing as well as a look at Real Estate Investment Trusts (REITs). Which are a great way to get exposed to different parts of the real estate market, including residential housing, and earn consistent dividends in the process. 

In today’s Juice, we continue looking inside ETFs. 

We do this with all types of ETFs and will continue to do so into next year. 

We last looked inside the most-searched real estate ETFs, which all happened to have a domestic focus. And we noted:

The first four ETFs on the list hold—pretty much—the same stocks and have generated near identical returns. Only REM—we have an Orange Crush on the ticker symbol—differs. We’ll explain how and why in a second in what is a key lesson for the new and timely reminder for even the most seasoned ETF investor.

For the complete explanation see the above-linked Juice. But — spoiler alert — the four ETFs we refer to all own the same REITs. 

So let’s look at a few of the global real estate ETFs in today’s Trackstar top five. These are the ETFs investors search for most across the platforms of our 100-plus financial media partners. We’ll focus on #1 the Vanguard Global ex-U.S. Real Estate Index Fund ETF (VNQI), #4 the SPDR DJ Wilshire International Real Estate ETF (RWX) and #5 the iShares International Property ETF (WPS). Because leaving out a REIT ETF and the China ETF makes for the most straightforward illustration of what you can expect to own in or learn from a typical global real estate ETF. 

First things first, so far this year, VNQI has generated a negative return of -8.7%. RWX is also in the red at -13.0%. And WPS is down 11.0% YTD. Over the last year, VNQI is up +1.3%, RWX is down -1.5% and WPS is up just +0.3%. Even this slight variation hints to us that we’ll likely see more variation in these ETFs than we did the domestic ones we looked at earlier this month. 

Let’s go under the hood to see. 

VNQI is a passive ETF that tracks the S&P Global ex-U.S. Property Index, consisting of real estate stocks in 30-plus countries. 

Here are VNQI’s top five holdings, alongside the percentage each holding occupies in the overall portfolio: 

• Goodman Group (GMG): 2.88 %
• Mitsui Fudosan Co. Ltd: 2.32 %
• Vonovia SE (VNA): 2.14 %
• Daiwa House Industry Co. Ltd: 2.07 %
• Sun Hung Kai Properties Ltd: 1.90 %

As you can see, not all of these stocks trade on US-based exchanges. Which leads to two key points we expected and are happy to make alongside this analysis: 

• Using ETFs can help you gain exposure to foreign stocks that do not trade on US exchanges or only trade on the OTC (over-the-counter) exchange. Investing on foreign exchanges can be complicated, if not intimidating for many investors. And, often, stocks on the OTC trade with such light volume that they pose liquidity concerns. 
• You can get exposure to global stocks you might not know about. Of course, you have to put your faith in an index or portfolio manager, but that’s part of investing in ETFs. 

RWX is also a passive ETF that uses the Dow Jones Global ex-U.S. Select Real Estate Securities Index as its benchmark. 

Here are RWX’s top five holdings: 

• Mitsui Fudosan Co. Ltd: 5.90%
• Link REIT: 3.44%
• Segro PLC: 3.04%
• Scentre Group: 2.31%
• Swiss Prime Site: 1.98%

Just by looking at the names you can see the broad global exposure in these ETFs. And, so far, just one common name in the top five. Though Link REIT is the 7th largest holding in VNQI. 

Now, onto WPS, which tracks the S&P Developed ex-U.S. Property Index, making it a passive ETF as well. 

Here are WPS’s top five holdings: 

• Goodman Group (GMG): 3.83 %
• Mitsui Fudosan Co. Ltd: 3.37 %
• Vonovia SE (VNA): 3.07 %
• Daiwa House Industry Co. Ltd: 2.88%
• Mitsubishi Estate Co: 2.84%

Because VNQI and WPS track similar indices, the top five holdings are similar. 

Now, we know way too much about a lot of things and we love to show off, but we’re not posers here at The Juice. International stocks of this sort aren’t our specialty. Which is also part of our larger point. 

If you’re the typical U.S. investor who wants to invest in artificial intelligence, you pretty much know where to go. You can buy a semiconductor ETF or even go with well-known household names, such as Google (GOOG)(GOOGL), Meta Platforms (META) and Nvidia (NVDA). Not without risk, but an area you’re more likely to be comfortable, if not proficient in. Like us. ETFs make it easy to one-stop shop a sector, space or theme. Even one you’re familiar with. 

Which brings us back to the top holdings in three of the most-searched global real estate ETFs. Across this slate, you have exposure to Australian industrial and commercial real estate (Goodman Group); one of Japan’s biggest developers (Mitsui Fudosan Co); Japan’s largest homebuilder (Daiwa House Industry Co. Ltd); and a company that owns more than half a million apartments across Germany, Sweden and Austria (Vonovia SE). 

What a world we live in. With so much access to seemingly everything. 

The Bottom Line: On the flip side of this, you might be thinking I don’t want such broad access to a whole bunch of stocks scattered all over the world. Stocks I know very little about. Housing and general real estate markets I know very little about. Good for you — taking a cue from your humble friends here at The Juice. 

The beauty of digging into ETF holdings, even if you have no interest in owning the ETF, is discovering these relatively obscure names. Maybe you believe in Japan. As a country. As an economy. As a real estate market. Whatever. But maybe you didn’t know that Daiwa House Industry Co. Ltd (what’s my name again?) is that nation’s largest homebuilder. Well, now you know. 

And that’s the type of information a little extra and creative research can uncover. 

Sometimes you’ll take it. Sometimes you’ll leave it. In both cases, you’re one up on most of your fellow investors.

• 13 Best Blue Chip Stocks Under $100
• Daily Stock Advice With Actionable Insights
• 11 Cheap Chinese Penny Stocks to Buy According to Hedge Funds
• 3 Dividend Aristocrats to Defend Your Portfolio in Q4