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.
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) solidly outperformed the broader market during the past year.
- The REIT ETFs with the best one-year trailing total returns are NURE, INDS, and EWRE.
- The top holdings of these ETFs are Public Storage Inc., Duke Realty Corp., and Ventas 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 significantly outperformed the broader market in the past year. The S&P 500 has provided one-year trailing total returns of 32.8%.
The best-performing REIT ETF over the past 12 months is the Nuveen Short-Term REIT ETF (NURE).
The benchmark figure above and all numbers in the statistical profiles below are as of Jan. 3, 2022, except the top holdings for NURE and EWRE, which are as of Jan. 4, 2022.
- One-Year Trailing Total Return: 51.7%
- Expense Ratio: 0.35%
- Annual Dividend Yield: 2.05%
- Three-Month Average Daily Volume: 28,597
- Assets Under Management: $118.0 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 Public Storage Inc. (PSA), a self-storage company operating as an REIT; Extra Space Storage Inc. (EXR), an REIT investing in self-storage properties; and Host Hotels & Resorts Inc. (HST), an REIT that invests in hotels.
- One-Year Trailing Total Return: 51.5%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 1.35%
- Three-Month Average Daily Volume: 76,468
- Assets Under Management: $469.8 million
- Inception Date: May 14, 2018
- Issuer: Pacer Advisors
INDS is a multi-cap fund that tracks the Benchmark Industrial Real Estate SCTR Index. The fund targets industrial REITs that are part of the ecommerce distribution and logistics networks along with self-storage facilities.
INDS is a blended fund, including both growth and value names within its portfolio. More than 81% of the portfolio is allocated to stocks in the industrial sector, and the remainder is in the warehouse sector.
- One-Year Trailing Total Return: 49.3%
- Expense Ratio: 0.40%
- Annual Dividend Yield: 2.91%
- Three-Month Average Daily Volume: 39,175
- Assets Under Management: $144.9 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 just over half of the portfolio.
The top holdings of EWRE include Ventas Inc. (VTR), a healthcare facilities REIT focused on properties in the United States, the United Kingdom, and Canada; Kimco Realty Corp. (KIM), an REIT that invests in shopping centers; and Boston Properties Inc. (BXP), a developer, owner, and manager of class A U.S. office properties.
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