Real Estate: "Own" / "Rent" Property without the Bricks & Mortars
Real Estate/Property is often added as another Asset Class to diversify the investment portfolio. Here’s the traditional arguments for including real estate in a multi-asset portfolio include:
1. low correlation with stocks and bonds.
2. Real estate has historically had a high risk-adjusted rate of return relative to stocks and bonds.
3. Real estate has a positive correlation with both anticipated and unanticipated inflation and remains an effective inflation hedge.
Here, as home traders with a retail budget, we are diversifying into real estate via options, to participate in the price action of property markets without touching the brick and mortars of the hard asset. Instead we use the options on REITs.
American Exercise–Style (all optionable)
ICF iShares
Cohen & Steers Realty Majors
IYR iShares
Dow Jones US Real Estate
RWR DJ
Wilshire REIT ETF
RWX SPDR
DJ Wilshire Intl Real Estate
VNQ Vanguard
REIT Index ETF
European Exercise–Style (optionable)
HGX PHLX
Housing Sector Index