Yes - and with REITs, any holding co that elects for the REIT tax treatment is a REIT, even if it’s not precisely real estate (hospitals, cell towers, etc). So investors don’t get what they think they have, and allocation decisions are being made by holding company CFOs.
Couldn’t they come up with a simple heuristic to avoid this? E.g. only if the market cap exceed certain threshold over x number of days would they increase the allocation.
This is spot on! These are professional hits. Good timing too with Robert Kennedy’s idiotic Ape utterances today!
Thank you Sir
This is very interesting! A squirrel sent me.
Welcome, thanks for joining us!
Thanks Phil! Another great, thought-provoking post. I get the point about "Cap weighted" REIT ETFs, I find they are problematic for 2 reasons:
1) The weighting is based on equity market capitalization, while the objective is to diversify away from equity exposure.
2) The correlation with economic sectors, particularly tech (data centers)
But ... I don't think this Cap weighted is a problem for broad equity, where you want the equity and sector exposure
Yes - and with REITs, any holding co that elects for the REIT tax treatment is a REIT, even if it’s not precisely real estate (hospitals, cell towers, etc). So investors don’t get what they think they have, and allocation decisions are being made by holding company CFOs.
Couldn’t they come up with a simple heuristic to avoid this? E.g. only if the market cap exceed certain threshold over x number of days would they increase the allocation.
Lookout forward to the upcoming post!