I have recently read an excellent post on the way to be a quant In short, it describes a scientific way of developing trading strategies by the turinginance site. Real estate a good diversifier in a portfolio - Some investors look as the principal advantage of REIT ETFs at the high distribution yield for income. But long term investors, who follow the strategy of rebalancing to a fixed asset allocation (see our Rebalancing what, why and how and model portfolios we have suggested - Straightforward , Swensen Seven , Smart Beta ), look to the diversification benefits of REIT ETFs. All depends on the continuance of at least reasonable functionality of large holdings Riocan and H&R., although we are inclined to favour the specific advantage of the lower MER
We can see this by using 's calculator to discover that XRE (input the symbol ) over the past twelve years has a 0.53 correlation with XIU (enter ) and a -0.05 correlation with XBB (enter ), the iShares broad Canadian bond ETF The numbers vary somewhat for different time periods but XRE has had consistently low correlation with XIU and XBB i.e. away from the 1.0 mark which signifies Dynamic Asset Allocation the entire perfect correlation coefficient that we don't want.
Read some excellent, simple explanations of how this comes about by Canadian Capitalist or Canadian Couch Potato or in among Vanguard's FAQs Vanguard's VRE portfolio is generating the income - see the blue bordered cells in the table that reveal the low trailing distribution yield of 1.8% along with the 5.4% yield of the portfolio holdings. The income will be doled out by the ETF, it is just that as the ETF grows, the investor benefits from capital gains rather than cash income.