Global Ex U.S. Real Estate Has Caught Fire In 2017

Searching for Opportunities Outside the U.S.

At WisdomTree, we have been writing about opportunities in markets outside the U.S. for some time, noting that thus far in 2017:

  • Emerging market equities—particularly those less sensitive to commodity price movements—have done well
  • Developed international markets, buoyed by positive election results in places such as France, have done well
  • With a weakening U.S. dollar, exposure to global currencies has been beneficial
  • Investors often look at real estate as an inflation hedge. Given where inflation-adjusted bond yields are around the world, this asset class has particularly interesting characteristics. But by looking at just U.S. real estate, you could be missing out on large swaths of the world’s real estate opportunities. The data actually suggests that of the $2.1 trillion market capitalization of global real estate, more than 61% (approx. $1.3 trillion) is located outside the U.S.1

    The WisdomTree Global ex-U.S. Real Estate Index has done well in 2017 by touching upon each of these developments. It is also unique in the marketplace in that its focus extends beyond the developed world with Europe and Japan and also includes emerging market real estate. 

    WisdomTree Global ex-U.S. Real Estate Index Has Dramatically Outperformed Other ex-U.S. Real Estate Indexes

    WT exUS real estate vs oher ex us real estate

     

     

  • 2017 Outperformance Stands Out: Each of the global or developed ex-U.S. indexes focuses on real estate outside the U.S., but country exposures tend to be quite different. While all the indexes included exposure to Hong Kong, only the WisdomTree and S&P indexes had exposure directly to China, and WisdomTree had approximately twice the weight. For WisdomTree’s approach, the China real estate stocks were up more than 100% over the period. On the opposite end of the spectrum was Japan, one of the worst-performing real estate markets in 2017. Japanese real estate represented more than 20% weight in each of the three non-WisdomTree indexes shown here that were focused on real estate outside the U.S., but it was a less than 10% exposure in the WisdomTree Index. 
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    Author: Travis Esquivel

    Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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