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VGSLX: This 3.9%-Yielding Fund Outperformed Its Peers In The Past Few Years

Published Tue, 11 Jun 2019 17:35:47 -0400 on Seeking Alpha

ETF Overview
Vanguard Real Estate Index Fund Admiral Shares (VGSLX) has a portfolio of U.S. REITs. The fund tracks the MSCI U.S. Investable Market Real Estate 25/50 Index. Investor of VGSLX should pay attention to the interest rate as this fund is sensitive to the rise and fall of the interest rate. The fund has an excellent track record of performance that is better than its peers. Therefore, we believe it is a good candidate for investors seeking exposure to REITs.
Data by YCharts
Sector Breakdown
Prior to February 2018, VGSLX tracks MSCI U.S. REIT Index. The index basically invests in properties to collect rents from tenants. However, in February 2018, VGSLX begin to track MSCI U.S. Investable Market Real Estate 25/50 Index. This index also includes specialized REITs such as cell tower providers, timberland providers, and data centers. As can be seen from the chart below, specialized REITs represents about 32.4% of VGSLX’s portfolio. We like this new portfolio mix as it is much more diversified than its previous index. These specialized REITs are often not as cyclical as traditional REITs and are less impacted in an economic recession.

Source: Vanguard Website
Besides specialized REITs we also like the fact that residential REITs make up about 14% of its total portfolio. This type of REIT should continue to do well thanks to a growing population in the U.S. and declining homeownership trend. Industrial REITs (about 7.7% of its portfolio) should... Read more