Real estate exchange-traded funds (ETFs) hold baskets of securities in the real estate sector, providing investors with a less expensive way to invest in the industry compared to other options. These funds often focus specifically on real estate investment trusts (REITs), which are securitized portfolios of real estate properties. REITs offer investors income potential as well as the liquidity of traditional stocks. Some of the major names in the REIT space include Vornado Realty Trust (VNO) and Welltower Inc. (WELL).
Investing in these and other REITs allows investors to receive dividend distributions. Though the financial returns may be lower than owning an entire building and pocketing all the rental income, there is less risk.
- The top three real estate investment trust exchange-traded funds (REIT ETFs) outperformed the broader market during the past year.
- The REIT ETFs with the best one-year trailing total returns are NURE, REZ, and EWRE.
- The top holdings of these ETFs are Sun Communities Inc., Public Storage, and Host Hotels & Resorts Inc., respectively.
There are 32 REIT ETFs that trade in the United States, excluding inverse and leveraged ETFs, as well as ETFs with less than $50 million in assets under management (AUM). All three of the top-performing REIT ETFs outperformed the broader market in the past year. The S&P 500 has provided a one-year trailing total return of 16.8%. The best-performing REIT ETF over the past 12 months is the Nuveen Short-Term REIT ETF (NURE). The benchmark figure for the S&P 500 above and all numbers in the statistical profiles below are as of Feb. 10, 2022.
- One-Year Trailing Total Return: 37.0%
- Expense Ratio: 0.35%
- Annual Dividend Yield: 2.05%
- Three-Month Average Daily Volume: 39,183
- Assets Under Management: $128.2 million
- Inception Date: Dec. 19, 2016
- Issuer: TIAA
NURE is a midcap blended ETF that tracks the Dow Jones U.S. Select Short-Term REIT Index. The index is composed of REITs that concentrate their holdings in apartment buildings, hotels, self-storage facilities, and manufactured-home properties. These REITs offer investors exposure to shorter-term lease agreements than many other types of REITs. Just over half of NURE’s portfolio consists of apartment REITs, with self-storage and hotel REITS making up the bulk of the remainder. NURE’s top holdings are Sun Communities Inc. (SUI), which invests in manufactured housing communities, recreational resorts, and marinas; Mid-America Apartment Communities Inc. (MAA), which invests in apartment properties; and Camden Property Trust (CPT), which holds investments in apartment properties.
- One-Year Trailing Total Return: 31.0%
- Expense Ratio: 0.48%
- Annual Dividend Yield: 1.98%
- Three-Month Average Daily Volume: 166,420
- Assets Under Management: $1.4 billion
- Inception Date: May 1, 2007
- Issuer: BlackRock Financial Management
REZ tracks the FTSE Nareit All Residential Capped Index, comprised of U.S. residential, healthcare and self-storage real estate equities. Just over half of the portfolio is comprised of residential REITs, with healthcare and specialized REITs occupying the bulk of the remainder of the portfolio. REZ is a mid-cap fund investing in both value and growth stocks. REZ is highly concentrated in a small number of names, with the top 10 positions accounting for nearly 60% of invested assets. The top three holdings of REZ include Public Storage (PSA), a REIT operating international self-storage facilities; Welltower Inc. (WELL), a REIT investing in healthcare infrastructure; and AvalonBay Communities Inc. (AVB), a REIT that invests in apartments.
- One-Year Trailing Total Return: 29.3%
- Expense Ratio: 0.40%
- Annual Dividend Yield: 2.91%
- Three-Month Average Daily Volume: 54,248
- Assets Under Management: $144.2 million
- Inception Date: Aug. 13, 2015
- Issuer: Invesco
EWRE targets the S&P 500 Equal Weight Real Estate Index, which equally weights stocks in the real estate sector of the S&P 500 Index. It is a multi-cap, blended fund, with midcap names making up more than three-quarters of the portfolio. The top holdings of EWRE include Host Hotels & Resorts Inc. (HST), which is focused on hotels; Ventas Inc. (VTR), a healthcare facilities REIT focused on properties in the United States, the United Kingdom, and Canada; and Kimco Realty Corp. (KIM), which invests in shopping centers.
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