Mutual Fund Summary

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Vanguard REIT Exchange Traded Fund (VNQ)

Fund Summary
Vanguard REIT ETF (VNQ) is an exchange-traded fund (ETF) that invests in equities issued by real estate investment trusts (REITs) which firms focus on purchasing office buildings or any other real properties (Investopedia 2015). Until 2016, the fund total net asset is about $64.2 billion and net asset value is around $80.2, moreover, it has a nearly 100% stocks as its assets (see Appendix 1).

Its issuer is Vanguard which is one of the biggest investment companies in the world, therefore this fund is based on a Vanguard mutual fund, it means that tracks the performance of the MSCI US REIT Index, which is a composition of public traded equity real estate investment trusts (REITs) (Wallace
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property trusts that covers about two-thirds of the value of the entire U.S. REIT market. In seeking to match the index, the adviser does not try to predict or profit from changes in the direction of the REIT market.” (The Vanguard Group 2016)

In details, because this is an exchange traded fund, which means it is a type of passive vehicles, these funds aiming at tracking a benchmark index (always the cheapest and liquid index that can set up a passive investment strategy after using sustainable quoted prices and charging much lower fees than active funds) and priced against that index. That’s why the company designed this exchange traded fund to track a benchmark and the performance of the MSCI US REIT Index. In the same time, Vanguard REIT ETF (VNQ) fees on $10,000 invested over 10 years are just $283 that is much lower than the average category of $2862 (see Appendix 2), this is another typical characteristic for an
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Markets normally moved in cycles, it means the time of rising and falling in the prices are crossed and circled together. Meanwhile, the benchmark index may focus on some particular categories under a period of time so the fund that seeks to track this index could underperform than the market and the price of the fund may decline later.

Investment assessment
Thanks to the asset class of VNQ is stock-sector ETF which focuses on limited sectors of the market accompanied with higher risk and it may be more volatile compared to other traditional securities, two aspects could be considered.

One is class asset. Owing to this is a special fund as explained before, investors should be careful about the fund portfolio. Particularly, they could take other part/category/sector funds or take a mix of short term and long term funds to eliminate even erode the overall risk, meanwhile, this is a passive fund so they can also choose like active funds.

The other is to test values of money. The attractive side is VNQ required lower fee charges since inception but it just followed its benchmark index and could hardly to be outperformed compared to the early years, the holders may think again about whether it is worth enough

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