As domestic real estate investment trust (REIT) indexes continue their downward slide, investors in funds tracking them are looking for cover. And international real estate may be the ticket.
To that end, Barclays Global Investors (BGI) has introduced the iShares S&P World ex-U.S. Property Index Fund (WPS), which began trading on the NYSE in early August.
The fund has an annual expense ratio of 0.48 percent and will compete head-to-head with the SPDR DJ Wilshire International Real Estate ETF (RWX), which also aims to track international real estate stocks and carries an expense ratio of 0.59 percent.
The new iShares fund is the first international REIT ETF to complement the suite of seven U.S. real estate funds that BGI previously managed (and still does).
The underlying index is composed of companies engaged in international property development, rental management and investment. The geographic mix of companies is broad and comes from Australia, Canada, Denmark, Germany, France, Japan, Hong Kong, Singapore, the United Kingdom and others. As of the end of May, the index had a total market capitalization of approximately $615 billion.
"The iShares S&P World ex.-U.S. Property Index Fund meets several important needs of investors: accessing a market with a cost-effective, tradable investment vehicle and diversification beyond what U.S. real estate can provide," says Noel Archard, head of U.S. iShares product development. "Many U.S. investors have trouble investing in the non-U.S. real estate market due to high costs, lack of liquidity and ways to access it. As more REIT and REIT-like structures are created outside of the U.S., BGI expects more individual investors and financial advisors to consider international real estate as an investment."
As of June 30, BGI has introduced 17 new iShares Funds and has captured most of the net inflows reported by U.S.-listed ETFs this year, gathering $22 billion of the $32 billion in ETF net flows.
Ron DeLegge is the San Diego-based editor of www.etfguide.com.