Is it REIT mania or madness?
REITs are clearly the star of the TSX and advisors are facing calls to include them in portfolios. But can a client get too much of a good thing and when should an advisor say "enough"? WP reports
Video transcript below:
Christopher Myrick, Wealth Professional TV
Christopher Myrick: REITs have been dominating [community] assets listings. Corporates love the funding and investors love the asset. They’re hot, but are they too hot? Advisors have an experience, they are only in on WP.
Chris Karram, Safebridge Financial Group & Investment Planning Counsel
Chris Karram: You know from my perspective, a REIT is just like any other asset class. It’s an opportunity to take advantage of, a piece of what exists in the market place. But by no means from my perspective is it something that the client should be considering taking advantage of from a holistic perspective as their only investment vehicle. Very much so does it make sense, if you are a part of someone’s portfolio, assuming it fits their overall objectives and goals as an individual. But in the end, it’s a little bit too tempered, too excited right now and it’s something we can take advantage of, but by no means we want to make sure that it’s going, taken over an entire portfolio of an individual client.
Christopher Myrick: While some say REITs are too hot, others say their appeal is because they are so secure, especially for investors who were burnt by global equity meltdown.
Roberto Loren, Co-founder The One Source Financial
Roberto Loren: REITs in general are good investment vehicles for the right client. Private REITs I believe has a little bit more advantage than publicly traded REITs, simply because they are immune or independent of the stock market volatility. Also, private REITs are simpler to do a research on, sometimes it’s really local, so you get to see and feel where the properties are.
Christopher Myrick: Yet others say the security surrounding REITs is distracting Canadians from better performing assets elsewhere.
Ed Rempel, Ed Rempel & Associates and Armstrong & Quaile Associates
Ed Rempel: And I think since we had the bear market in 2008, everybody is looking for something with a feeling of safety and there is a huge search for yield and now people are willing to overpay for yield. And I think there is a misconception that you are very safe if you have something that pays you income, but if you have something that you overpaid for, it’s not necessarily safe, a better thing is to have solid growing businesses that you buy at reasonable prices.
We are possibly at the end of yield bubble and I think it has gotten to be a bit of a bubble and as rates are beginning to rise, it’s the very high yield investments that are being affected and more a solid growth type investments that actually will have much more opportunity.