Property Investing for Commitmentphobes

Consider real estate ETFs if you want to own property but don’t want to commit

Alanna Petroff 28 March, 2012 | 4:23PM
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If you’ve been wanting to buy a house of your own but aren’t yet ready to take the leap onto the property ladder, perhaps owning a real estate ETF is a better option for you. You won’t have to worry about renovations or estate agents, and the market is much more liquid, allowing you to get in and out of your investments with relative ease.

Investing in the real estate market using ETFs can be a highly desirable option for many kinds of investors, explains Morningstar ETF analyst Gordon Rose.

“Property ETFs offer investors exposure to a traditionally illiquid asset class that has historically exhibited stock-like returns and bond-like income streams,” says Rose. “However, investors should be aware that direct property investments behave quite differently from investments via real estate funds; meaning that funds tend to have high correlations to stock markets and thereby limited diversification benefits for a portfolio. Nevertheless, real estate funds offer a few advantages for investors compared to a direct property investment. For example, no mortgage or maintenance are required [and you’ll have] improved liquidity versus direct investment.”

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.