Indexfundfan\’s blog (new URL is Indextown.com)

September 9, 2006

International Real Estate – A Re-think

Filed under: My Portfolio — indexfundfan @ 12:22 am

In June, I started adding international real estate funds into my portfolio. The assets are held in the taxable account. I first added the Alpine International Real Estate Equity fund (EGLRX) and followed by the Fidelity International Real Estate fund (FIREX). Both funds are nicely up by about 8% presently.

2006-09-08-firexdivtitle.png2006-09-08-firexdiv.png

However, yesterday I had a rude shock with FIREX because it made a substantial distribution after the close of trading on Sept 8, 2006. The total distribution was $0.87, which is about 6% of NAV (NAV = $14.37 after the distribution). Of this, $0.48 is for short-term capital gains (the worst kind). This is the largest distribution the fund has ever made in its history.

2006-09-08-firexdivhistory.png

When I was first considering this fund, I did examine the distribution history and I thought the distributions were quite manageable. Now, it appears that I was wrong. I am reconsidering my international real estate allocation. One option would be to skip it until a more tax-efficient vehicle comes along.

PS: SSgA has filed with the SEC to introduce the DJ Global ex-US Real Estate ETF. This should be more tax-efficient. 😉

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3 Comments

  1. indexFundfan, I’m buying PID. (Powershares Intl. dividend ETF)in my taxable account. Pays about 3% div. If Fidelity R/E fund has now just paid a huge div. I’d prob. still stay with it because it is STILL a good fund.That is why I really don’t buy any mutual funds(I have 1 fund only).I put $7,000 dollars into a fund in Jan. about 5 years ago and the market didn’t go anywhere that year and they paid me $700 cap/gains in Dec. My account went down -4% as well.(i moved out of funds at that time) I’ll stay with ETF’s. Just my thoughts. Have a good weekend, Vacman

    Comment by Vacman — September 9, 2006 @ 5:53 am

  2. Unfortunately, for international real estate equity, there are currently no ETFs available. I am only aware of a closed end fund RWF.

    I hate to pay taxes (who does anyway?!) on something which I could have avoided.

    Comment by indexfundfan — September 9, 2006 @ 6:08 am

  3. Hi Kirk,

    I have moved your comment to the new blog location at http://www.indextown.com. Follow the link below to see your comment:

    http://www.indextown.com/archives/2006/09/09/international-real-estate-a-re-think/

    Comment by indexfundfan — September 28, 2006 @ 12:01 pm


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