Time to invest in REITs?
I commented in Kopiandproperty.Com’s LinkedIn post about investing in Real Estate Investment Trusts (REITs) for first time investors. Yes, yours truly agrees with the blog’s author that REITs offer some advantages e.g. professional management, diversified property investment portfolios, possibility of getting regular dividends etc. Especially in the current economic climate that has battered property REITs that are heavily invested in the Hospitality market segment in Malaysia, maybe it’s time to go “bottom fishing” (stockbrokers’ parlance meaning to buy the market trough)
Problem is how to pick the property REITs that will outperform when the Hospitality property sector recovers eventually.
In another lifetime, about 30 years ago, yours truly marketed unit trusts for the smallest of the Big Four listed banks in Red Dot Island. Like REITs, I think UTs also offer similar advantages - the promise of “professional management”, diversification of stock investment portfolios, the promise of regularly paid out dividends etc) but also share some of the disadvantages, viz; high annual fees some have dodgy management etc.
Also as the following article at seekingalpha.Com about the dangers of investing in REITs makes abundantly clear by examples, you still need to pick the right Unit Trust to buy. 👌 The author has a graphic showing just 5% of 200 REITs analysed were picked for investment. In
In another lifetime (ie in the 1990s) when yours truly started out as a rookie investment analyst at C*** covering Malaysia and Singapore stocks from Raffles Place, I think but cannot be 100% certain the ratio of stocks that we recommended as a Buy was around 5-10% of the stocks we covered. Everything else was a “Long Term Buy”, “Buy on Weakness”, “Value Buy if price falls x%”, “Strong Hold”, “Hold”etc. Anything but a “SELL”.
Investment analysts seldom issued “Sell” recommendations on stocks they covered back then in the 1990s. Unless the prospects were truly dire for the company. The problem -you see -was that to some prickly corporate managements, the S word was verboten. No problem if their stock was classified a “Hold” by analysts. Just as long as the S word was not used. Any analyst who dared to issue a Sell recommendation might not be invited back to attend the annual results briefing for analysts and the press. And miss out on the roast beef lunch with Chateau Latour.
Caveat Emptor is my Dua Sen, folks when considering buying REITs
Disclaimer
In the 1980s, yours truly set up and marketed 3 Unit Trusts at the smallest of the Big Four listed banks in Red Dot Island . One was an innovative “no load” CPF approved fund called Shenton Thrift Fund (after the bank's then HQ building at Shenton Way). See below for a screenshot in 2011 when it was still managed by DBS Bank, but now with a sales charge of 4%.
Copyright by Jussi Askola, Seeking Alpha
