
Real Estate Strikes Out on Its Own in the Stock Indexes - chollida1
http://www.nytimes.com/2016/08/27/your-money/real-estate-strikes-out-on-its-own-in-the-stock-indexes.html
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baccredited
FYI - You can already buy this sector with the Vanguard REIT ETF (VNQ)

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haney
> Seeing real estate as a stand-alone sector in an index could also drive more
> money to REITs.

I'm going to be very interested to see how this reclassification impacts the
price of REITs. I'd imagine that capital inflows are going to cause a spike in
prices.

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akg_67
In the short term, capital outflow from selling of REITs by Financial Index
Funds will depress the REIT prices. Financial Index Funds have much more
capital invested in them than that in the REIT index Funds. Any REIT selling
by Financial Index Funds will have bigger impact than any REIT purchasing by
REIT Index Funds.

Come tax time, lots of investors in Financial Index Fund will be in for the
surprise, a larger capital gains unless Financial Index Funds decide to spin
off REIT holdings as a separate REIT Index Fund instead of selling REIT
holdings.

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REBurner
Real estate professional here, investing in listed and non-listed. Few ETFs
will have to adapt to this change, but those that will have had a long time to
figure out the most tax efficient way of doing so. While they are passive
managers, they still have incentives to help their investors with structure.

The new GICS sector could bring some new attention to the sector. This
probably will affect small cap more than large cap as the generalists take a
broader look at the sector. Many have invested in the large caps for a while
just to have some exposure. There have been rumors that general stock managers
have underweighted the sector overall as it was a part of their 'financial'
bucket, but unlike the traditional financial stocks. However, I wouldn't
expect money rushing in or out. If there is any price drop over the next
couple weeks I would expect it is due to expectations around the Fed rather
than ETFs selling.

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chollida1
In a world where so many people do passive ETF index based investing this has
the ability to move markets.

With Reits becoming their own asset class, suddenly a lot of money is going to
be funneled int this space, mostly without investors even knowing about it.

And of course since Reits will suddenly pull in more money, there are other
area's of the market that will have that money pulled from them.

I think the article mentions it, but Reits tend to be counter cyclical to
Finance, an area that is a large part of the broad market, as low interest
rates help real estate while high interest rates help banks. So people have
been watching financial ETF's as one area that may be hit by this change.

Lot's of funds have spent the past 6 months positioning themselves to try and
gain from this. Fortunately for most people, this won't be a one time event
like an ETF re balancing but it will happen gradually.

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themartorana
What does this do to the cost of real estate overall? I'm in no way versed on
investing, let alone in real estate trusts, but $900B seems like a lot of
money.

Is there an impact on the cost of housing in general?

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haney
REITs encompass more than just housing (there are large REITs for malls,
office buildings, prisons, and even data centers). I would imagine that
multifamily and student housing REITs increasing in equity value would allow
them to use some of that value to take on more projects, thus increasing
demand for real estate and increasing the price. But most of the sandboxes
that they're playing in aren't individual homes (other than mortgage REITs
which represent about 10%, not sure how they would be impacted, I'm not a REIT
expert).

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oxryly1
"X Strikes Out ..." is a terrible headline format, since "strikes out" means
either to soundly fail or to optimistically begin a venture. Boo.

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eggdude
Given the context ("on Its Own") is doesn't seem very ambiguous.

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oxryly1
I read it also as "real estate tried the stock market by itself and failed."

But yes, the phrase "strike out on your own" does hang together a bit.

