What is the largest risk for me if my portfolio is made of 99% REITS? - Seedly
Seedly logo
Seedly logo
 

Stocks Discussion

REITs

Investments

Anonymous

Asked on 18 Jan 2020

What is the largest risk for me if my portfolio is made of 99% REITS?

Is there any risk at all? Should i be looking to diversify? If yes, what should I be looking at?

0 comments

11 answers

Answer Now

Answers (11)

Sort By

Your portfolio is narrowly-focused on REITs. Therefore some of the bigger risk is that, your portfolio may encounter huge drawdown when the overall REITs sector is underperforming or in the down-trend.​​​

0 comments

👍 1
Geraldo L.
Geraldo L.
Level 7. Grand Master
Answered on 26 Feb 2020

You should try to diversify your portfolio into other sectors, markets, asset classes. If interest rates go up, your entire portfolio will be impacted.

0 comments

👍 0
Alex Chua
Alex Chua, Freshmore (Engineering System Design) at SUTD
Level 6. Master
Answered on 26 Feb 2020

Concentration risk (on properties)

Diversify into other sectors and asset class

Buying Etf and index is a quick way to diversify

0 comments

👍 0

If your portfolio is made of 99% REITs, there is a risk that all the REITs will undergo a correction at the same time during a market downturn. To put it simply, your portfolio is not well diversified enough. I would recommend a diversified portfolio with different asset classes with low correlations.

0 comments

👍 0
Davin
Davin
Level 7. Grand Master
Answered on 26 Feb 2020

The risk is that yr portfolio basically only expose to property. If there is any bad news on property (new ruling from gov, interest rate, etc...), the volatility will b very high.

0 comments

👍 0
pat
pat
Level 7. Grand Master
Answered on 19 Jan 2020

Interest rates risk as reits movements/dividends depends on interest rates.

0 comments

👍 0
Billy Ko
Billy Ko
Level 7. Grand Master
Answered on 19 Jan 2020

Interest rate is the key risk you're facing given how prices move inversely with interest rates due to a lower net income for payout when interest rates rise.

Some other notable factors would be if your REIY portfolio is over-concentrated on a particular industry, you may face cannibalisation where the smaller REIT companies might one day fall i.e. Sabana REIT due to the over-competitiveness.

Dilution of shares is another as REITs would conduct rights issue on a more frequent basis as compared to usual companies.

0 comments

👍 0
Bjorn Ng
Bjorn Ng
Level 9. God of Wisdom
Answered on 18 Jan 2020

Concentration risks of course. Right now, REITs are priced high because interest rates are low. However, if it goes the other way, there is a possibility REITs will correct downwards.

Think of it as you just putting all your money in 1 stock, pretty close analogy.

0 comments

👍 0

Concentration risk. Within itself, there are various risk factors, e.g. interest rate risk, policy risk, market risk

Here is everything about me and what I do best.

0 comments

👍 0
Choon Yuan Chan
Choon Yuan Chan
Level 9. God of Wisdom
Answered on 18 Jan 2020

Largest risk is the increase in interest rates. Share price of REITs are known to move inverse to global interest rates

0 comments

👍 0
Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered on 18 Jan 2020

Overconcentration risk to interest rate changes

0 comments

👍 0