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Are Realty Mogul REITs any better than Vanguard REIT Index Fund?

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  • Are Realty Mogul REITs any better than Vanguard REIT Index Fund?

    I have been comparing RealtyMogul REITs to Vanguard REIT Index fund (VGSLX or VNQ):
    My understanding is that the main advantage to the Mogul REITs is the lower correlation with the stock market. The Vanguard funds are very liquid and easy to trade, without any waiting period. Both have low minimums (none for VNQ), as compared to crowdfunding sites and private REITs.

    However, I was very surprised to see the difference in returns: The Mogul REITs distributions are 6% and 4.5%, while the NAV is pretty stable over time. The Vanguard REIT fund has had an average annualized return of 10% since 2001, 9% last 10 years, and 8.3% last 5 years. I did not expect such a difference. In fact I expected the opposite!!!

    Does anyone think that lower correlation with the stock market is worth the illiquidity and the lower performance? Any other reason to invest in these public non-traded REITs? Am I missing something?


  • #2
    VNQ/VGSLX is low cost and spreads your risk out a lot more. Seems a lot safer. Also historical returns since its inception are better than VFINX (S&P 500 index fund). If you want to hold REITs, seems like the Vanguard funds are the way to go.


    • #3
      VNQ tracks equity REITs. The correlation coefficient with VTI is about 0.7 over the past ten years. If you want to invest in RE debt, you’ll probably get a lower correlation with lower volatility but also lower average returns.

      Basically you should probably decide whether you want to incorporate hard money lending into your investing strategy. Most likely you haven’t learned much about it yet and should read more about it. Broadmark (BRMK) is a publicly traded REIT that you could look into if you want to diversify beyond VNQ. Or you could look into private funds, but be prepared to spend a lot of time on due diligence.