VNQ: REIT ETFs Are Not Suitable For Income

Pedro Augusto Prazeres325 FollowersFollow5ShareSavePlay(14min)Comment(1)SummaryREITs, often favored for high dividends, have underperformed broad equity markets in total returns and risk-adjusted terms.VNQ delivered a 354% total return (7.31% CAGR) since 2004, lagging RSP’s 458% even before RSP’s dividends.REITs like VNQ exhibited higher maximum drawdowns than diversified equity ETFs, contradicting perceptions of lower risk.Overweighting REITs for yield is weak; a globally diversified equity allocation offers superior risk-return outcomes. J Studios/DigitalVision via Getty Images Investment Thesis It is common knowledge that REITs are great at providing generous distributions to shareholders and therefore are a great option when it comes to income. But I must say I agree with thatThis article was written byPedro Augusto Prazeres325 FollowersFollowEnglish and Brazilian Portuguese localization specialist and writer specializing in Finance, Economics, and Investments. My strategy is focused on wealth preservation, income, and long-term appreciation. My national portfolio is made of Brazilian hand-picked stocks and real estate funds, and my international one consists of ETFs that cover the entire globe.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.