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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

Indirect Investing in Global Property

Peter Hemple searches for ways to gain overseas exposure

I first wrote in PIN about investing in overseas property markets (South Africa) through an exchange traded fund (ETF) in 2012. At that time there were 3,600 ETFs listed globally and four years later there are more than 6,100 available and Goldman Sachs estimates that today's $3trn ETF industry could double in size over the next four years.

An ETF is an investment fund traded on the stock exchange so it can be bought and sold on a daily basis, offering property investors the chance of diversifying their portfolio, by sector and country/region, while also having an instant exit strategy. There are ETFs that track most investments now, from commodities like gold and water to stock markets in nearly every country.  

ETFs tend to have lower costs than traditional funds and have been available in the US since 1993 and in Europe since 1999. They are also usually actively managed and most ETFs clearly list its largest fund holdings and the percentage of the fund attributed to each company. Many websites list the daily changes in most ETF prices.

With hindsight South Africa looked great!
The three property ETFs that were detailed here in the 2012 article have all performed fabulously well over the past four years. Before we look at what other ETFs and real estate investment trusts (REITs) are currently available, let's first review how those South African ETFs have performed.

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