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Subject:  Re: Portfolio Advice/Help Date:  4/20/2019  9:41 AM
Author:  TheBreeze Number:  93097 of 96381

I have some money in REITs and commodities, and if I had to do it over, would not do that. I thought I could both reduce volatility and possibly increase the upside, and they both have been a 20 year drag.

Likely true for commodities (see note at end of post), but not for REITs in an indexed approach, looking at Total Returns (assumes dividend reinvestment, thus a better approximation of what one could do in an IRA or the like, rather than in a taxable account).

S&P 500 Total Returns index from :
Start 1999, 1379.84; End 2018, 5383.63. Ratio of 3.90, CAGR over 20 years 7.0%.

FTSE NAREIT total returns index from
Start 1999, 1099.09; End 2018, 6852.72. Ratio of 6.23, CAGR over 20 years 9.58%.

In other words, with dividend reinvestment, the indexed total of REITs in North America has materially outperformed that of large-cap North America stocks (S&P 500) over the last complete 20-years period. Most definitely not "a drag".

OK, I looked closer at the REIT portion of my portfolio.

My REITs are:
~45% VNQ which has performed well
~35% ICF which has performed OK
~20% SNH which has been a stinker.

SNH is Senior Housing Properties, which I thought was a way to not only diversify my portfolio with Real Estate, but also capitalize on the trend of aging in the US with more senior care housing needed. Maybe SNH is doing a bad job, maybe the demographic shift isn't increasing senior housing property, maybe senior housing is increasing but unprofitably, or maybe I'm "right but too soon." I arrived at the thought to do this after reading a book about how demographics will be driving worldwide assets over the next half century by...oh, now I forgot. But he's one of the pundits about demographics, and those guys don't get notoriety by saying "here's a trend that will change things slightly over a long term" but by saying "these investments will crash and only these other ones can save you, ZOMG!!!" I "discounted" the intensity of the book's premises, but it still made sense for a couple percent of the port.

So, anyway, that's part of why my REIT slice hasn't been going gangbusters. Maybe it's another plank in the platform of "buy the Vanguard Index, and rebalance occasionally."
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