Is Now The Time To Be Long This Real Estate ETF?

What is interesting about the real-estate space is how investing in property has changed over the years. What was once an old-fashioned and wealth-building tool via personal investment has become even simpler with the rise of Real Estate Investment Trusts (REITS) and Exchange Traded Funds (ETFs) trading various REITS.

For those now looking to diversify their portfolio into real estate or add a new allocation to this alternative asset class, one of the easiest ways to do so is to invest in an ETF like the Horizons Canada REIT Index ETF (TSX:HCRE).

The upside with an ETF, like the one above, is it provides Canadian investors access to a Canadian dollar dividend (better for tax purposes) and is widely diversified.

This ETF holds a wide variety of retail properties held across multiple REITs, allowing investors to get a highly diversified portfolio of real estate assets, at a very low management expense ratio (MER) fee.

The downside with this ETF is because it is so highly diversified, investors also get exposure to specific real estate sub-sectors such as retail and office real estate.

These sectors are likely to underperform over the long-term, and are sectors I would avoid. ETFs should be viewed as long-term investments, and as such, I would caution investors to instead look at owning individual REITs with solid residential or industrial real estate exposure.

That said, coming out of a recession, this ETF could perform really well, as the office and retail sub-sectors should outperform in a recovery.

Invest wisely, my friends.