[GammaJammer]

But for people / institutions that trade REITS in size, presumably (and I know nothing at all about this market btw) there must be analysts who will pore over the actual portfolio composition of a given REIT and come up with a fair value (roughly at least) for it, trading when price moves away from this become over extended. Or not......

Help me out here.....

[GammaJammer]

And on that point. Presumably it also means that if an individual were to use a REIT to hedge property exposure (and I don't even know if you can short sell them so this could all be moot) wouldn't one also have to take into account possible tracking error depending on what the property portfolio you are protecting looks like. E.G. hedging a high end London residential portfolio with a commercial property based, Manchester centric property vehicle would presumably not be anything like a perfect hedge (extreme example just to make a point).

Am I talking out my @rse here?

[BlowFish]

No not at all GJ these are all things that perplex me. I think I need to talk to someone who knows, whilst there is a fair amount of information on the interweb it seems to be largely to attract investors. (invest in property without having to worry about managing a portfolio).

The other thing is the composition of the various portfolios (none seem to have much/any residential which is what interests me particularly). I have looked at basic price charts for several and they seem to broadly follow a very similar pattern .......Except a couple with large retail property exposure had massive drops a couple of months ago. Kind of perplexing (as most if not all have some retail element) and worrying too, if you are on the wrong side of such a quick and violent move.

Short term volatility looks like an issue too (as may have been mentioned) though as a trader I look at that and think hmm those waves would be nice to trade. Got to keep sight of what the object of the exercise is

[GammaJammer]

Presumably a big part of why they are ofen weighted towards commercial exposure is that you can trade bigger 'blocks'. It's unweildy to trade £300k houses if you have a few hundred million to invest - easier to buy a small office block than a bunch of houses, logistically I reckon.

I may well be talking out me aris for all I know, but my god I'm convincing sometimes

GJ

[BlowFish]

Hehe nice to get you out of your area of expertise, I don't feel like such a muppet!

[GammaJammer]

Originally Posted by BlowFish »

Hehe nice to get you out of your area of expertise

Not exactly tricky.....

[AgeKay]

Hey BlowFish,

I don't know whether this issue is still current with you since you opened this thread some time ago (btw, you were right about the property prices dropping), but you could have a look at Eurex' IPD UK Annual All Property Index Futures (PUKA).

Not only is it futures, but the contract size is just £50k which makes it easier to reflect your actual portfolio. Don't have any idea about the actual liquidity though (it says minimum quote size is 20 contract [=£1 million in value] which isn't too bad for hedging). I just heard about it when Eurex announced it some time ago.

[BlowFish]

Thanks AK,

Actually I think it is always 'current'. Obviously adjusting a property portfolio takes a bit more than a mouse click! Any instrument that lets you hedge (even if you are just a simple home owner) is worth investigation.

Cheers.