Hey guys,
Today I’m going to explore the performance of the REIT slice in my Roth IRA. One of the consistent growth drivers since I formed this portfolio have been my REITs. Over the last three months, REITs have been the highest performing portion of my portfolio and the second best performing portion since inception last November.
Prior three month performance:
All-time performance:
For those who don’t know, “REIT” stands for Real Estate Investment Trust. A real estate investment trust is a company that owns, operates, or finances income-generating real estate. There are special laws that REITs abide by, including paying over 90% of their earnings back to investors in the form of dividends. Because of this, REITs typically provide a great opportunity for price appreciation as well as dividend growth.
Oversimplified, REITs are an easy way to own a share of real estate without actually owning it.
My REIT portfolio slice is composed of the following stocks:
- Store Capital Corp. (STOR) – 25%
- Realty Income Corp. (O) – 15%
- Innovative Industrial Properties Inc. (IIPR) – 10%
- Extra Space Storage (EXR) – 10%
- Ellington Financial Inc. (EFC) – 10%
- Digital Realty Trust Inc. (DLR) – 10%
- Boston Properties Inc. (BXP) – 10%
- Omega Healthcare Investors (OHI) – 10&
Each have a slightly difference niche in real estate, but all of them have been in the green since portfolio inception.
This looks like great returns, but what if the market returns for real estate have been better? I’m going to compare my returns in this slice to a common real estate market ETF, Vanguard’s Real Estate Index Fund ETF (VNQ). My early year contribution to my IRA makes it a bit tricky to compare, but I’ll compare apples to apples after my IRA max out in early January of this year.
- Vanguard’s Real Estate Index Fund ETF performance from January 8th – April 24th: +17.71% ((97.78 – 83.07) / 83.07) x 100
- My REIT slice performance from January 8th – April 24th: +15.17% ((8,146.40 – 7,073.66) / 7,073.66 x 100
A few things to note about that calculation, usually I subtract dividend reinvestment, but none of the dividends from my portfolio have been re-invested in this slice, given the weighting system that M1 Finance uses.
Interesting to see though, for my REIT slice year to date I would have been better off investing in the index. Although, I am still leading the S&P 500 overall so I hope this outperformance of my overall performance continues.
Until next time guys, thanks for reading!
Roth and Roll Finance 