ETFs: A Better Way to Invest in Commercial Property?

Rather than investing directly in the underlying assets, property ETFs invest in the equity of real estate companies and Real Estate Investment Trusts (REITS)

Kenneth Lamont 5 October, 2016 | 9:01AM

This article is part of Morningstar's Guide to Passive Investing, helping investors make smart choices to meet their long-term investment goals.

In their quest for yield many investors have turned to commercial property funds to help meet their needs. However many may be unaware that index funds and ETFs offer a highly liquid, low-cost and broad exposure to the asset class.

Rather than investing directly in the underlying assets, property ETFs invest in the equity of real estate companies and Real Estate Investment Trusts (REITS) listed on stock exchanges. The largest REIT in the UK is Land Securities Group (LAND) which owns and manages a string of high-profile commercial properties such as the ‘Walkie Talkie’ skyscraper and the iconic Piccadilly Lights in Central London.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
iShares Dev Mkts Prpty Yld ETF USD Dist GBP2,190.38 GBP-1.30
iShares Glb Prpty Secs Eq Idx (UK) A Acc239.91 GBP-0.50
iShares UK Property ETF GBP Dist638.15 GBP-1.52
L&G Global Real Estate Div Index C Acc80.15 GBP-0.59
Land Securities Group PLC945.20 GBP0.00

About Author

Kenneth Lamont  is a passive funds research analyst for Morningstar Europe.

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