ETF for Global Real Estate

Today the State Street Global Advisors (State Street), the investment management arm of State Street Corporation launched the streetTRACKS DJ Wilshire International Real Estate ETF (RWX) on the American Stock Exchange (Amex). The ETF is billed to be the first such offering designed to track overseas listed real-estate stocks and has an expense ratio is 0.6%.

RWX is based on the Dow Jones Wilshire Ex-US Real Estate Securities Index and is the first ETF to monitor performance of publicly traded global real estate securities outside of the U.S. To be eligible for the index, a company must have a market cap of at least $200 million and must derive at least three-fourths of its revenue from the ownership and operation of real-estate assets. The average market cap of an index holding is roughly $2.8 billion. The ETF doesn't focus exclusively on real-estate investment trusts, or REITs, because some countries such as Germany and UK have not yet adopted legislation that gives tax breaks to the companies similar to the United States.

RWX is the latest in State Street's series of international ETF offerings. Recently, State Street launched two Japan-focused ETFs: streetTRACKS Russell/Nomura PRIME JAPAN ETF (JPP) and streetTRACKS Russell/Nomura Small Cap Japan ETF (JSC), both of which are based upon indexes created by the Russell Investment Group and Nomura Securities Co., Ltd.

It may be recalled here that the State Street manages an ETF tracking the U.S. market, StreetTracks Dow Jones Wilshire REIT ETF (RWR) , that is up about 32% year to date and boasts a 5-year annualized return of about 23%. But many fear that the US REIT market is now overvalued and a correction is now overdue. The new ETF will thus provide a good opportunity of diversification.

RWX started trading today at $60.10 and at the end of the day closed 54 cents up at $60.64.