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Author: wcfenton Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Re: Some advice about IYR? Date: 12/18/2004 4:04 PM
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DoLoop...

I bought some of this mostly-REIT-holding ETF back in August 2001. The share price has increased by little over 50% since then; when the dividends are figured in, the ROI has been rather nice.

I'm trying to decide if I should sell it now.

Specifically, I'm wondering what effect the bursting of the housing market bubble - and the general decline in the economy - will have on this fund.

---------------

From an old prospectus (2002) detailing the investment strategy (in part) of this REIT (IYR):

"...Component companies include hotel and resort companies and real estate investment trusts ("REITS") that invest in apartments, office and retail properties. The Fund will concentrate its investments in these industry groups..."

There are basically three types of REITs:

1) Equity REITs that get their revenue primarily from the rent of properties.
2) Mortgage REITS that get their revenue from the interest earned from mortgage loans.
3) Hybrid REITs which are a combination of the first two.

Equity REITs make up the vast majority of all REITs (about 96%). So, it would appear that if there was a bursting of the "Housing Bubble" that you probably wouldn't be negatively affected. It may well benefit you in that people have to live somewhere - either in their own homes or apartments of some kind, don't you think?

As far as trying to predict how long a Bull-Run the REIT Industry is going to enjoy...no can do! Everything's pretty much a gamble, including the economy and investing. It may have a year or more on it's up cycle or it may tank tomorrow - no one knows for sure. So...the decision has to be yours my friend. There is always an alternative - if you are really worried, you could sell half and keep the rest.

Just a few thoughts. Good luck in your decision making!

Regards,
Bill




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