In the opinion of many experts, the lasting growth on financial markets seems to be approaching its closing stage. In such a situation, investors traditionally search for alternative options to receive income.
One of such options is REIT (Real Estate Investment Trust) – real estate funds with a special legitimate investment status.
The world’s financial markets have been demonstrating sustained growth starting from 2008. Main indexes have reached their maximum historical figures or are approaching them. Moreover, the sentiment of investors is negatively affected by the remaining geopolitical tension. In the foreseeing future, these factors can delay the further growth of securities, which investors have got used to in recent years, – note Rietumu Asset Management (RAM) experts.
To receive the dividend yield that historically exceeds the average market figures, investors can use REIT stocks. These institutions are engaged in the construction, acquisition, development, management and financing of real estate objects. Their ‘motherland’ in the 1960s was the USA, yet in the early 2000s REIT funds came into operation also in Europe.
Depending on the fund’s specialisation, the range of target objects can be wide – office premises, commercial and retail facilities, warehouses, residential houses, medical institutions, premises used by governmental institutions, etc. Moreover, by the respective laws of the country of their registration, usually, REIT funds must pay a minimum of 90% (in some countries 80%) of their net profit to investors in the form of dividends – this exempts the funds from paying the corporate income tax.
Therefore, the yield of an investor having shares of REIT is comprised of the equity market price appreciation and largely due to regular payments of dividends.
REIT has certain advantages if compared to ownership of real estate property. Thus, investment in REIT does not require the involvement of an investor in maintenance and repair works, and there is no need to make insurance payments or pay real estate tax.
According to the data of MSCI US REIT Index (the stock index of American REIT), during the last ten years, the compound annual total return (includes price change and dividends paid) of REIT was 13.69%.
Another benefit of REIT is that the currency of investment can be either EUR or USD. Thus, investors have an opportunity to control currency risk of their investment.
Customers of RAM can invest in REITs within the framework of an individual portfolio “REIT Basket”. The minimum size of investment is 100 thousand euros or US dollars.
More details about the individual portfolio “REIT Basket” can be obtained from RAM specialists by phone
+37167005525 or by e-mail:
[email protected]
.
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DISCLAIMER: This document (including any attachment (-s)) does not constitute a request, offer, recommendation or invitation of any kind to buy, sell or redeem any financial instruments or to conclude and/or to perform other transactions of any kind.
The authors of the information presented in this overview, as well as JSC “Rietumu Asset Management" IMF, registered in the Commercial Register of Republic of Latvia on January 29, 2014, registration number 40103753360, legal address: 7 Vesetas Street, Riga, LV-1013, Latvia, hereinafter referred to as “RAM” , both together and individually, are not liable for possible use of the information presented in this overview, including any direct or indirect damages (including lost profits), as well as any penalties. Evaluations, opinions and forecasts presented in this overview are based solely on the RAM’s specialists' conclusions regarding financial instruments and issuers considered in this overview. While the information contained in this overview is obtained from sources believed to be reliable, the RAM does not guarantee its accuracy and completeness. Any of your investment decision should be fully based on your assessment of your personal financial circumstances and investment objectives. The RAM draws your attention to the fact that transactions in the securities and financial instruments market involve risk and require appropriate knowledge and experience.
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