renter looking into REITS?

[metta2006]

I'm a renter as we can't afford these ridiculous prices in Vancouver, Canada. What do you think of investing in REITS in a vpp to get some exposure to real estate? REITS are hard to resist in tax free account with high dividend yields and relatively solid performance in the last several years compared to general stock index. What percentage of exposure to REITS would be appropriate in the whole retirement portfolio? Thanks!

[moda0306]

REITS for a renter are a solid move IMO for one's variable portfolio.

[ngcpa]

There was a famous study done by Ibbotson (I believe around 2000 -2005) that found 20% REIT's would not only increase returns, but also lower risk of an overall portfolio.  However, since then REIT's have found to have a higher correlation with stocks in general than at the time of the study.  Perhaps an allocation of 10-15% (of stocks) might work well.
Norm

[Ad Orientem]

I like REITs as an idea for a VP investment.  I would go with VNQ or something very similar to keep the fees down and give you greater diversification.

[cabronjames]

are REITs by nation (or even metro area like Vancouver) highly correlated together, as much as stock returns by nation are correlated together?  Isn't there some somewhat truthful cliche "real estate is local"?

perhaps a Canada specifc REIT index fund could be appropriate for your VP.  Or maybe a set of a few individual Canadian REIT company stocks, that have 50%+ of their property in the Vancouver metro (if any such companies exist).

I'm not sure the Vanguard indices US REIT VNQ or ex-US REIT VNQI would be relevant for your purpose.

[blackomen]

I think REITs track rent more than housing prices which would give an excellent hedge against rising rents for a renter.