Comments on: Claymore Global Real Estate ETF (CGR)

By: How many asset classes?

How many asset classes? — Mon, 08 Sep 2008 02:48:33 +0000

[...] is a larger question that must be asked in discussing the recent introduction of new Claymore funds tracking global real estate and infrastructure: just how many asset classes does a portfolio need? How much more [...]

By: Andrew Baechler

Andrew Baechler — Thu, 28 Aug 2008 16:38:25 +0000

There are approx. 20 countries with REIT-like legislation in place. US REITS dominate the developed market REIT universe followed by Australia, Great Britain and Japan. A number of emerging markets also have listed REITs.

Unlike Infrastructure, there is enough data to demonstrate with statistical significance that Global Real Estate is a separate asset class with its own independent risk and return characteristics. I have reviewed data that indicates Global REITs have a low correlation to the S&P 500, and Russell 1000 Value index. Correlation increases when Global REITS are compared to the Russell 2000 Value Index. There is also data that suggests that the various Global REIT markets are not highly correlated with one another.

So investing in Global REITs should offer a potential diversification benefit to Canadian investors and merits consideration.

By: Canadian Capitalist

Canadian Capitalist — Thu, 28 Aug 2008 14:58:46 +0000

Xenko: That’s a concern with new ETFs. For instance, FFR has attracted a mere $4.5 million in assets. Granted, competitor RWX has almost $1 billion in assets and being a first mover in Canada might be to CGR’s advantage. Only time will tell.

By: Xenko

Xenko — Thu, 28 Aug 2008 14:37:08 +0000

“Moreover it is not clear if a market for CGR can be sustained because global real estate is cooling (down 20% over one year) after extremely good returns over a five year period.”

Sounds like buying high to me. Are the going to sell off and shut down just as it starts to go up in the future?

By: Canadian Capitalist

Canadian Capitalist — Thu, 28 Aug 2008 14:20:40 +0000

Thanks for the information Andrew. Do you have an opinion on adding Global Real Estate to a portfolio? I noticed that DFA offers a fund in this area.

By: Andrew Baechler

Andrew Baechler — Thu, 28 Aug 2008 13:47:47 +0000

I’m in the midst of reviewing infrastructure ETFs for our firm. If you’re interested in Infrastructure and the Claymore Infrastructure ETF listed above, you may want to compare it against the iShares Global Infrastructure Fund (IGF) that tracks the S&P Global Infrastructure Index and the SPDR FTSE/Macquarie Global Infrastructure 100 ETF (GII) that tracks the FTSE Macquarie Global Infrastructure Index. Both of these funds are U.S. listed.

Ernst and Young also has an excellent report “Investing in Global Infrastructure 2007″ available here:

http://www.ey.com/global/content.nsf/International/Real_Estate_Library_Global_Infrastructure_Emerging_Asset_Download