Author Topic: Net Lease index ETF  (Read 260 times)

HeadedWest2029

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Net Lease index ETF
« on: June 11, 2019, 11:13:52 AM »
I don't own any REITs or REIT Index funds beyond the underlying REIT coverage in VTSAX, but I've always thought triple net lease REITs sounded like a pretty good investment relative to the real estate asset class in general.  I've never acted on it because any access to that would be as an accredited investor and super concentrated, but the recent Talk Your Book pod (http://awealthofcommonsense.com/2019/06/talk-your-book-the-net-lease-reit-etf/) peaked my interest (I usually skip those episodes and just listen to Animal Spirits) because it's an ETF based on a NASDAQ index of net lease public companies.  Possible downsides as I see it, interest rate hikes eroding returns, concentration on US economy, less tax efficient, and more expensive to invest in (.6% ER).  Upside would be fairly reliable income generation with more upside than a bond...so somewhere between a bond and stocks (less volatile than stocks).  Anyone on the boards a huge proponent or critic of net lease companies?  Back-testing shows a roughly 5% dividend yield.  From what I gather with net lease you hope for 5% return in dividends and ~5% in appreciation.  Ticker for the ETF is NETL

Proud Foot

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Re: Net Lease index ETF
« Reply #1 on: June 11, 2019, 12:15:37 PM »
Why not just invest directly in the companies the ETF is holding? The ETF has only been around since March 2019 and has 24 holdings, of which the top 10 make up 61%.

HeadedWest2029

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Re: Net Lease index ETF
« Reply #2 on: June 11, 2019, 12:21:13 PM »
Why not just invest directly in the companies the ETF is holding? The ETF has only been around since March 2019 and has 24 holdings, of which the top 10 make up 61%.

Definitely a reasonable way to go about it for those willing to keep up with it.  I guess I'd attach some value to automatic re-balancing and adding / subtracting companies as that comes up.  A more hands-off portfolio management.  I wish Vanguard would swoop in and provide this ETF, but I kinda doubt it

Rob_bob

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Re: Net Lease index ETF
« Reply #3 on: June 11, 2019, 05:27:51 PM »
I'm not sure why you mentioned needing to be an accredited investor?  Maybe if you were buying into a non-publicly traded REIT, but I would never do that, too illiquid and risky for me.

I have money in three of the top 10 REITS in NETL, all publicly traded and as easy to buy/sell as any other stock.

The beauty of the triple net lease is they just collect rent without having to do maintenance or pay taxes on the property.  Not sure how interest rates really effect that business model since the rent money still comes in but retail investors can get their panties in a wad and buy and sell based on rates.  However the main reason, for me anyway, to be in REITs is for the cash flow over the long term.

I am keeping an eye on NETL myself but feel that some of the holdings like O are pricey now and at some point real estate will be out of favor again as a sector and that is when I might pick some up.