Benchmark Your Portfolio: The VNQ Challenge

seekingalpha04-27

No matter how you make your investing decisions, you and you alone are responsible for the outcome.One of the best ways to improve your skills as an investor is to benchmark your decisions against ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2430714886?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/105829681/image_105829681.jpg","is_english":true,"pubTime":"2024-04-27 20:00","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2430714886","market":"hk","top_or_hot":-1,"title":"Benchmark Your Portfolio: The VNQ Challenge","media":"seekingalpha","content":"<div>\n<p>No matter how you make your investing decisions, you and you alone are responsible for the outcome.One of the best ways to improve your skills as an investor is to benchmark your decisions against ...</p>\n\n<a href=\"https://seekingalpha.com/article/4686230-benchmark-your-portfolio-vnq-challenge\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Benchmark Your Portfolio: The VNQ Challenge</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBenchmark Your Portfolio: The VNQ Challenge\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-27 20:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4686230-benchmark-your-portfolio-vnq-challenge><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>No matter how you make your investing decisions, you and you alone are responsible for the outcome.One of the best ways to improve your skills as an investor is to benchmark your decisions against ...</p>\n\n<a href=\"https://seekingalpha.com/article/4686230-benchmark-your-portfolio-vnq-challenge\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IIPR","symbol_name":"Innovative Industrial Properties Inc","start_time":0,"source_url":"https://seekingalpha.com/article/4686230-benchmark-your-portfolio-vnq-challenge","article_id":"2430714886","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/105829681/image_105829681.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2430714886","pubTimestamp":1714219200,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"No matter how you make your investing decisions, you and you alone are responsible for the outcome.One of the best ways to improve your skills as an investor is to benchmark your decisions against mea","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IIPR":"Innovative Industrial Properties Inc","TRNO":"Terreno Realty","VICI":"Vici Properties","WY":"惠好","BK4588":"碎股","BK4221":"木材房地产信托","CFA":"VictoryShares US 500 Volatility Wtd ETF","BK4234":"特殊用途房地产信托","BK4084":"特种房地产投资信托","FR":"第一工业地产","FROG":"JFrog Ltd","VNQ":"不动产信托指数ETF-Vanguard","REXR":"Rexford Industrial Realty Inc","AMH.AU":"AMCIL LIMITED","BK4097":"系统软件","EGP":"EastGroup Properties Inc","BK4217":"自存仓储房地产信托","BK4171":"工业房地产投资信托","CFA.SI":"NikkoAM-STC Asia REIT","PLD":"安博","CPT.AU":"Cipherpoint Ltd","CPT":"卡姆登物业信托","EPRT":"Essential Properties Realty Trust Inc.","PSA":"公共存储公司","PCH":"Potlatch Corporation","INVH":"Invitation Homes Inc.","MAA":"MAA房产信托","BK4215":"住宅房地产投资信托","BK4567":"ESG概念","CUBE":"CubeSmart","BK4533":"AQR资本管理(全球第二大对冲基金)","IRT":"Independence Realty Trust Inc","AMH":"American Homes 4 Rent"},"translate_title":"衡量你的投资组合：VNQ挑战","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PCH":1,"WY":1,"VNQ":1,"VICI":1,"TRNO":1,"REXR":1,"PSA":1,"PLD":1,"AMH":1,"MAA":1,"IRT":1,"INVH":1,"IIPR":1,"FR":1,"EPRT":1,"EGP":1,"CPT.AU":1,"AMH.AU":1,"CPT":1,"CUBE":1,"CFA.SI":0.9,"US5Y.BOND":0.65,"FROG":0.65,"US7Y.BOND":0.65,"US6M.BOND":0.65,"CFA":0.65,"US3Y.BOND":0.65,"US30Y.BOND":0.65,"US2Y.BOND":0.65,"US12M.BOND":0.65,"US10Y.BOND":0.65,"US912797GB79.BOND":0.6,"US912797HH31.BOND":0.6,"US912797HG57.BOND":0.6,"US912797HE00.BOND":0.6,"US912797GW17.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GK78.BOND":0.6,"US912797FS14.BOND":0.6,"US912797FH58.BOND":0.6},"content_text":"No matter how you make your investing decisions, you and you alone are responsible for the outcome.One of the best ways to improve your skills as an investor is to benchmark your decisions against meaningful indices and professional portfolios.This article compares the returns of the 17 FROGs I identified last year, to the returns of the VNQ, over the past 12 months.Key takeaways from these results, and implications for future investment decisions, are discussed.   julos/iStock via Getty Images No matter how you make your investing decisions, you and you alone are responsible for the outcome. One of the best ways to improve your skills as an investor is to benchmark your decisions against meaningful indices and professional portfolios. Every year, I put together a REIT portfolio I believe will outperform the Vanguard Real Estate ETF (VNQ). Until this year, I have relied on a strategy I call FROG-hunting. FROG stands for \"Fast Rate Of Growth\". Instead of plowing my money into REITs that pay high, safe dividends (which I call COWs, for \"Cash Only Wanted\"), I invest in REITs that are growing fast, and outperforming the VNQ over the trailing 3 years. I got great results with this approach for the first few years I used it, when inflation and interest rates were near zero. Then the spike in interest rates and inflation in late 2021 changed everything. High inflation drove retired investors to higher-yielding securities and discouraged growth investing, due to the reduced value of future cash flows. Meanwhile, rising interest rates allowed prudent investors to buy debt instruments with much lower risk than REITs, while also reaping interest equal to or greater than the average REIT dividend. Money flowed out of commercial real estate, and nearly all REITs took a beating, despite stellar operating performance, especially the FROGs. Last year at about this time, I published a list of 17 FROGs, and made no prediction as to whether they would outperform VNQ or not. It is instructive to review that list now, and see how they fared, from April 1, 2023, to April 1 of this year. The 2023 FROG Pond The FROGs identified a year ago included:  VICI Properties (VICI) CubeSmart (CUBE) Essential Properties (EPRT) Weyerhaeuser (WY) PotlatchDeltic (PCH) Independence Realty (IRT) $Public Storage(PSA-N)$ (PSA) First Industrial (FR) American Homes 4 Rent (AMH) EastGroup Properties (EGP) Invitation Homes (INVH) Prologis (PLD) Rexford Industrial (REXR) Mid-America Apartments (MAA) Terreno (TRNO) Camden Property Trust (CPT) Innovative Industrial Properties (IIPR)  All had posted trailing 3-year FFO and cash-from-operations growth of 10% or better, had strong balance sheets with liquidity ratios of 1.66 or greater, (with most over 2.00). All had market cap of $2.2 billion or greater, and had outperformed the VNQ on total return over the trailing 3-year period. Here are the results, and the lessons learned. The Cold Hard Facts      Purchase Price Div. paid Yield Price 12-mo 12-mo   Ticker Yield % 4/1/23 12 months on Cost 3/31/24 Gain % Return    VICI 4.78 $32.62 $1.64 5.01 $29.60 (-9.26) (-4.25)   CUBE 4.24 $46.22 $2.00 4.33 $45.03 (-2.57) 1.75   EPRT 4.43 $24.85 $1.13 4.55 $26.20 5.43 9.98   WY 2.52 $30.13 $0.91 3.02 $35.56 18.02 21.04   PCH 3.64 $49.50 $1.80 3.64 $46.68 (-5.70) (-2.06)   IRT 3.49 $16.03 $0.64 3.99 $15.65 (-2.37) 1.62   PSA 3.97 $302.14 $12.00 3.97 $286.50 (-5.18) (-1.21)   FR 2.41 $53.20 $1.33 2.50 $51.66 (-2.89) (-0.39)   AMH 2.80 $31.45 $0.92 2.93 $36.34 15.55 18.47   EGP 3.02 $165.32 $5.06 3.06 $176.32 6.65 9.71   INVH 3.33 $31.23 $1.34 4.29 $35.07 12.30 16.59   PLD 2.79 $124.77 $3.57 2.86 $127.92 2.52 5.38   REXR 2.55 $59.65 $1.56 2.61 $48.84 (-18.12) (-15.51)   MAA 3.71 $151.04 $5.67 3.75 $128.70 (-14.79) (-11.04)   TRNO 2.50 $64.09 $1.75 2.73 $64.60 0.80 3.53   CPT 3.82 $104.84 $4.03 3.84 $96.42 (-8.03) (-4.19)   IIPR 9.47 $75.99 $7.24 9.53 $100.88 32.75 42.28   Mean 3.73     3.92   1.48 5.40   Median 3.49     3.75   (-2.37) 1.75   VNQ 3.71     4.16   2.40 6.56   Click to enlarge SOURCE: Seeking Alpha Premium, MarketWatch, and author calculations Of the FROG's, 10 were winners and 7 were losers. However, only 6 of the winners outperformed the VNQ, leaving 11 underperformers. The VNQ returned a total of 6.56% over the 12-month period in question, with a price Gain of 2.4% and a Yield on Cost of 4.16%. By contrast, despite a whopping 42.28% total return by IIPR, the FROGs on average returned just 5.40%, underperforming VNQ by 116 basis points. In addition to IIPR, there were upside standouts in INVH (16.59%), AMH (18.47%), and WY (21.04%), all posting double-digit gains. Unfortunately, there were also double-digit losers in REXR (-15.51)% and MAA (-11.04)%. Note that the FROG portfolio began with a median Yield at purchase of 3.49%, compared to 3.71% for the VNQ. That is normal. The basic idea of FROG investing is that you sacrifice a small measure of Yield, in order to get a greater measure of Gain in return. Of the 17 FROGs, 15 of them raised their dividend, which is characteristic of FROGs, resulting in a median Yield on Cost of 3.75%. However, the VNQ dividend rose even faster, going up 45 basis points, from 3.71% to 4.16%. That is unusual. Key takeaways VNQ had a decent year, though pitiful compared to the NASDAQ. But it was not quite as good a year for FROGs. Although the (so far frustrated) hope of a decline in interest rates brought on a rally across REITdom, starting last October, the no-risk interest rate on treasuries remained in the 4.25 - 4.50% range, which was higher than the average REIT yield. Thus, only higher-yielding REITs made sense in the short term. After all, why invest in a risk asset, when a no-risk asset pays the same income stream or better? That was bad news for the FROGs. Although inflation came down a long way over the previous 12 months, it remained above the dividend of some of the FROGs, including WY, FR, REXR, and TRNO. Of that group, only WY outperformed. Investor's bottom line I will not be a FROG investor this year. Even though interest rates are still likely to fall a little, from where I sit it looks like the next couple of years will be rough on REITs. Even if FROGs manage to outperform the VNQ, that will be cold comfort if VNQ is losing the kind of altitude I think it will. This is a 180-degree about-face from my outlook at the beginning of this year. I base this new, pessimistic expectation primarily on the technicals, but also on a looming crisis in Office REIT debt. Where the technicals are concerned, I had thought that the VNQ's high of $116.71, struck on New Year's Eve, 2021, was the culmination of a long III wave, with an IV wave pullback and a V wave rally yet to come. When REITs rallied off the October 2023 low, I thought that was the start of the V wave, that would take VNQ to the $130 range. But the move down off the 2021 high was deeper than expected, and the rally off the October 2023 low now looks more like merely a B-wave bounce. We will know for sure if the price of VNQ falls below $70.61 before it regains its December 14 high of $90.09. If that is the case, then we are likely working on a C wave that will take the price down into the 50's before finding a bottom. Of course, there will be upward bounces along the way, but the overall picture is so bleak that I have liquidated all but two of my REIT positions.  VNQ price chart (Seeking Alpha Premium)","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2430714886"}