Keepin’ it real: real estate funds again, this time international

Mutual funds

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This week’s Barrons has an article about investing in global real estate () in which five mutual funds were suggested:

Kensington International Real Estate
Alpine International Real Estate
Cohen & Steers International Realty A
ING Global Real Estate A
Northern Global Real Estate Index

I’ve been interested in learning more about real estate funds and REITs ever since I made my some months ago and then after receiving advice from readers and realizing I was buying something I really didn’t understand. One reader more knowledgable than I recommended looking internationally instead.

The funny thing is that of the 5 mutual funds listed in the article, only three are really available to me as an individual investor. KIRAX is open to institutional investors only (and its sister funds KIRBX and KIRCX are available for redemptions only), as is IGLAX, and none of our 401(k) plans list these as an option. NGREX carries a transaction fee at Schwab. It’s also worth noting that many of these carry up to a 4.5-5.75% front load fee depending on your broker.

Just the availability and expenses alone make most of these funds unattractive. That leaves me with two options, Alpine International Real Estate, and the Cohen & Steers (IRFAX). IRFAX is around 2 years old vs. EGLRX’s 18 years, carries a higher expense ratio than EGLRX (1.61% vs. 1.17%), making EGLRX much more attractive to me.

After that, it was on to reading EGLRX’s prospectus (the fund currently focuses on the UK, W. Europe, Australia, Canada, Japan, Singapore, HK, Malaysia, and Thailand), and reading the SAI to make sure that management was vested in the fund, I’ve decided it’s a good candidate for investment.

I like that it’s received consistent returns and has been under the same management for 18 years and that its manager (Samuel Lieber) invests in both private-equity and other instruments not easily accessible to the general public (from the point of view of diversification, not snobbery), given that I need someone with expertise to invest money for me in international real estate.

EGLRX Top 10 Holdings

Company Symbol % Assets
NORWEGIAN PROPERTY AS N/A 3.53
ORIENT-EXPRESS HOTEL OEH 3.35
JM AB (publ) N/A 2.92
Capitacommercial N/A 2.08
Vivacon N/A 2.00
Kaufman & Broad N/A 1.96
DAWNAY DAY TREVERI N/A 1.91
Citycon N/A 1.90
Banyan Tree Hldgs N/A 1.68


However, based my previous experience with ICF, I’d be curious if anyone had thoughts or warnings on this fund, or investing in international real estate in general, given this is a pretty new area for me. I realize there’s been a huge run-up in real estate worldwide, not just here in the US, and that funds in general may well be overvalued.

As usual, feedback welcomed!

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4 Feedbacks on "Keepin’ it real: real estate funds again, this time international"

Anonymous

Just a note that the information you provide about the Kensington Int’l RE Fund is incorrect. All share classes are currently open to any investor via a financial intermediary, such as a financial advisor, though various platforms (as listed on Yahoo Finance). The fund is offered institutionally without a sales load (KIRYX) for a $30,000 minimum investment.



Ricemutt

Thanks for the clarification. I guess what I meant was that the fund wasn’t open to me to invest without opening up an account at a new financial intermediary. Appreciate the correction though!



Anandi

$30,000 minimum investment?? Apparently that fund is targeted for people with a way higher income than us. (And here I thought we were doing pretty well!)



MossySF

Some ETFs available now to cover this region: RWX, DRW

Ishares also planning to come out with an international REIT at an even lower expense.



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