The stock market has been doing well this year, but there's plenty of uncertainty ahead for investors to consider. If you want to reduce some risk and invest in a high-quality exchange-traded fund (ETF), an attractive option to consider is the Vanguard FTSE Canadian Capped REIT Index ETF (TSX:VRE), which focuses on real estate.
Real estate is often viewed as a defensive sector because it involves physical assets and long-term lease agreements that can weather market turbulence better than more cyclical industries. This ETF provides broad exposure to the Canadian real estate market, holding various real estate investment trusts (REITs) that specialize in residential, retail, and industrial spaces. By holding an ETF rather than individual stocks, investors benefit from significant diversification, which is a key strategy for navigating a volatile climate. And a big reason to invest is also for the ETF's attractive payout.
Currently, the fund offers a respectable dividend yield of 3.2%. While this might not be the highest yield available, it is backed by the steady cash flows inherent in the Canadian real estate market. Year-to-date, the fund is up around 1%, a sign of the fund's resilience and overall stability.
The ETF can make for an excellent pillar for your portfolio. It allows you to collect recurring income without the stress of picking specific stocks, while offering some good stability. Even if a recession hits the Canadian economy, the diversified nature of this fund makes it a solid option to hang on to for the long haul.
