Most Australians want to invest in property – bricks-and-mortar has many attractions. But with high house prices, good quality commercial property way beyond the means of most of us and surging interest rates, we need to look at other ways we can get a stake in property without outlaying a fortune or borrowing a cent.
Enter real estate exchange traded funds (ETFs), which are available on the Australian Securities Exchange (ASX). The good news is you can buy a parcel of ETFs for as little as $500 and instantly have a diversified portfolio of either Australian or overseas income-producing property companies.
These companies own assets in many sectors, such as residential, commercial offices, industrial, retail and more specialised areas, such as health and hospitality.
Diversifying our investments to include property, a big asset class, makes a lot of sense. Diversification across geographical boundaries reduces risk.
Access to expert management is also an attraction, but this does come with fees.
ETFs pay regular income distributions, which is particularly good for those who live on investment income. Other pluses include low initial outlay and high liquidity and transparency.
One negative is volatility: you have no control over the price of your ETF, so ideally you would not panic and sell if it fell. Another downside is having no control over the portfolio in which you own a stake.
The four local ETFs, ranked from highest funds under management down, are:
• Vanguard Australian Property Securities Index (ASX: VAP)
• VanEck Australian Property (MVA)
• SPDR S&P/ASX 200 Listed Property (SLF)
This story is from the September 2022 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the September 2022 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Is the public market shrinking?
Australia needs a healthy stock market to give companies access to funds and to allow retail investors to build wealth.
India: three steps to transformation
Massive investment and extensive reforms turbocharge the economy.
The ballet of business
Changing direction, products, models and marketing is a hard task for a business. We chart what it takes to turn a business around, plus profile four successful pivots.
Save money and the planet
Could the high cost of living give us the incentive we need to reduce how much water and energy we use or waste? These eco-friendly household tips will help you do just that.
AI adoption is the new black
Artificial intelligence is set to reshape the commercial world, and small enterprises can’t afford to miss the boat.
Spam attack! Murky laws jam our inboxes
Unwanted marketing material is one of the pain points of modern life.
From rags to riches in style
Rich Tran sported a bowl cut until he was 14 years old and had no intention of becoming a hairdresser.
New work deals are killing the 'old' office
The Covid pandemic and the subsequent lockdowns accelerated the trend to more people working from home. It was a mixed experience.
Points taken: the truth about rewards
Can hopping between credit cards really boost your frequent flyer haul and give you cheap or free travel - or is it doing more harm than good behind the scenes? Money puts it to the test.
Shortcuts to own a home
Innovative ideas with a focus on low costs and sustainability could help solve the housing crunch.