|

13 of the Best Real Estate and REIT ETFs

Vital Dollar may receive compensation from companies, products, and services covered on our site. For more details, please read about how we make money.

Best Real Estate and REIT ETFs

Many investors want to add exposure to real estate in their portfolio, and one of the most practical ways to do it is by investing in exchange-traded funds (ETFs) focused on real estate holdings. ETFs tend to have low expense ratios, although the details can vary significantly from one ETF to the next.

The best REIT ETFs allow investors to overcome some of the major obstacles that prevent many people from getting involved in traditional real estate investments like rental properties. Liquidity is a concern with most real estate investments, but ETFs are highly liquid since they can be bought and sold at any time, just like a share of stock or a mutual fund.

Many of the leading real estate ETFs invest in real estate investment trusts (REITs). While you can invest in individual REITs directly, buying an ETF allows you to hold an ownership interest in many different REITs, which provides better diversification and broad exposure.

It’s also possible for a real estate investor to get started with as little as $1 for a real estate or REIT ETF, overcoming the common obstacle of needing a large amount of capital to invest in real estate.

If you’re looking for a passive investment option, buying REIT ETFs may be something you should consider.

The purpose of this article is to highlight some ETFs that may be a good fit if you’re looking for a way to invest in real estate. This is not investment advice and it’s possible to lose money with these ETFs. If you have questions about your own situation, be sure to seek personalized help from a financial professional.

Related: How to Get Free Stocks

The Best Real Estate and REIT ETFs

Now, let’s take a look at some of the most popular and best-performing real estate ETFs. These ETFs are presented in no particular order, they are not ranked. Look at the details of each and see which REIT ETF might be right for you.

The details for each investment listed below are taken from ETF Database and are valid as of the day this article was published, November 18, 2021. Be sure to check the current details as they will change with time.

Related: The Best ETFs for Long-Term Growth

M1 Finance - $50 Signup Bonus

M1 Finance (free) makes it easy to manage your money. Choose from a wide variety of professionally-created "pies" (portfolio allocations) or create your own. Contribute to your account and M1 Finance automatically manages the investments.

1. Vanguard Real Estate ETF (VNQ)

The Vanguard Real Estate ETF (VNQ) is one of the most popular real estate funds with more than $40 billion in assets under management. Part of the reason for its popularity is because it offers excellent diversification through multiple asset classes. VNQ invests in many different types of real estate, including housing, office buildings, storage facilities, hotels, and more. With well over 100 holdings, VNQ is well-rounded. VNQ is primarily focused on properties that generate current income, and appreciation is secondary.

With a solid track record of excellent fund performance, broad diversification, a focus on income-producing real estate, a competitive dividend yield, and a low expense ratio, VNQ is a solid choice.

Vanguard Real Estate ETF Details

Price: $110.05
Expense Ratio: 0.12%
Annual Dividend Yield:
2.96%
1 Year Return: 31.60%
3 Year Return: 52.85%
5 Year Return: 68.67%

2. iShares Core US REIT ETF (USRT)

USRT attempts to track the FTSE NAREIT Equity REITs Index, which is made up of U.S. real estate equities (excluding infrastructure REITs, mortgage REITs, and timber REITs). At least 80% of the fund’s assets will be invested in the securities of the underlying index.

USRT stands out as one of the best REIT ETFs through a very low expense ratio of just 0.08%, which is even lower than VNQ. It’s an excellent, low-cost choice.

iShares Core US REIT ETF Details

Price: $64.85
Expense Ratio: 0.08%
Annual Dividend Yield:
2.10%
1 Year Return: 35.20%
3 Year Return: 47.95%
5 Year Return: 65.89%

3. Invesco S&P 500® Equal Weighted Real Estate ETF (EWRE)

EWRE attempts to replicate the performance of the S&P 500 Equal Weight Real Estate Index as closely as possible. This index includes stocks of companies in the S&P 500 that are real estate-focused. At least 90% of the fund’s assets will be invested in securities that make up the index.

With this fund, you’ll get a blend of large-cap and mid-cap holdings. Unlike a REIT ETF, this ETF does not invest directly in real estate. Instead, it invests in real estate stocks or companies that conduct business in the real estate industry.

Invesco S&P 500® Equal Weighted Real Estate ETF Details

Price: $40.19
Expense Ratio: 0.40%
Annual Dividend Yield:
2.91%
1 Year Return: 40.26%
3 Year Return: 61.36%
5 Year Return: 85.46%

4. Real Estate Select Sector SPDR Fund (XLRE)

XLRE is a REIT ETF that attempts to track the Real Estate Select Sector Index, and at least 95% of its assets are invested in the securities that comprise the index. This includes real estate management companies and REITs, excluding mortgage REITs.

By investing primarily in large-cap U.S. real estate companies, XLRE does not offer a great deal of diversification. However, it offers a low expense ratio and could be a good choice if it fits with your real estate investment strategy.

Real Estate Select Sector SPDR Fund Details

Price: $48.48
Expense Ratio: 0.12%
Annual Dividend Yield:
2.89%
1 Year Return: 32.09%
3 Year Return: 61.12%
5 Year Return: 91.46%

5. iShares Residential and Multisector Real Estate ETF (REZ)

While most of the funds we’re covering focus on commercial real estate, REZ is an excellent choice if you’re looking to invest in residential REITs. This fund invests in housing, public storage REITs, and health care real estate. It tracks the FTSE Nareit All Residential Capped Index, with at least 80% of the portfolio invested in assets from the underlying index.

The expense ratio is higher than some of the other funds listed here, but REZ is a solid choice if you’re looking for a passive way to invest in residential real estate.

iShares Residential and Multisector Real Estate ETF Details

Price: $93.10
Expense Ratio: 0.48%
Annual Dividend Yield:
1.98%
1 Year Return: 36.46%
3 Year Return: 57.62%
5 Year Return: 84.90%

6. SPDR Dow Jones REIT EFT (RWR)

RWR tracks the Dow Jones U.S. Select REIT Index, with at least 80% of the portfolio invested in assets that are a part of the underlying index. With this fund, you’ll get exposure to a wide variety of publicly traded REITs for both commercial and residential real estate properties. It provides a little more diversification than some of the other funds covered here.

SPDR Dow Jones REIT EFT Details

Price: $117.55
Expense Ratio: 0.25%
Annual Dividend Yield:
3.03%
1 Year Return: 37.72%
3 Year Return: 40.86%
5 Year Return: 56.20%

7. iShares Cohen & Steers REIT ETF (ICF)

ICF tracks the results of the Cohen & Steers Realty Majors Index. This index is made up of about 30 holdings that fall into the mid-cap and large-cap ranges of U.S. REITs. At least 80% of ICF’s portfolio will be invested in assets that are a part of the Cohen & Steers Realty Majors Index.

iShares Cohen & Steers REIT ETF Details

Price: $71.50
Expense Ratio: 0.33%
Annual Dividend Yield:
1.67%
1 Year Return: 30.53%
3 Year Return: 49.93%
5 Year Return: 69.41%

8. iShares U.S. Real Estate ETF (IYR)

IYR is a REIT ETF that tracks the Dow Jones U.S. Real Estate Index, which includes about 100 mid-cap and large-cap REITs. At least 80% of the fund’s assets are invested in equities that make up the underlying index.

IYR is considered to be somewhat similar to VNQ, but VNQ’s expense ratio is significantly lower. Although there is some overlap in the holdings of both funds, they are weighted differently. Both IYR and VNQ provide some level of diversification.


iShares U.S. Real Estate ETF Details

Price: $110.43
Expense Ratio: 0.41%
Annual Dividend Yield:
1.69%
1 Year Return: 29.55%
3 Year Return: 49.53%
5 Year Return: 73.75%

9. Fidelity MSCI Real Estate Index ETF (FREL)

If you’re looking for an ETF that provides broad coverage of U.S. real estate, FREL could be a solid choice. It tracks the MSCI USA IMI Real Estate 25/25 Index, which generally represents the performance of real estate in U.S. equities.

The diversification of FREL is good, and the expense ratio (0.09%) is extremely low.

Fidelity MSCI Real Estate Index ETF Details

Price: $32.85
Expense Ratio: 0.09%
Annual Dividend Yield:
2.83%
1 Year Return: 31.61%
3 Year Return: 52.12%
5 Year Return: 76.75%

10. Pacer Benchmark Industrial Real Estate SCTR REIT (INDS)

INDS is one of the more unique funds on this list. It tracks the performance of the Benchmark Industrial Real Estate SCTR Index. This is a non-diversified fund that invests in warehouses, storage facilities, manufacturing facilities, and other real estate involved in the distribution of goods.

With the increasing popularity of e-commerce, partially driven by the pandemic, the need for warehouses and distribution facilities has dramatically increased in the past few years. If you believe the trend of e-commerce sales will continue to increase, the future performance of INDS is intriguing. The downside of INDS is the expense ratio of 0.60%, which is higher than any of the other funds on this list.

Pacer Benchmark Industrial Real Estate SCTR REIT Details

Price: $51.18
Expense Ratio: 0.60%
Annual Dividend Yield:
1.35%
1 Year Return: 43.53%
3 Year Return: 113.71%
5 Year Return: N/A

11. VanEck Vectors Mortgage REIT Income ETF (MORT)

MORT aims to track the results of the MVIS® US Mortgage REITs Index. Unlike other types of REITs that invest in income-generating properties, mortgage REITs invest in mortgages and mortgage-backed securities. This may include small-cap, mid-cap, and large-cap companies.

Typically, mortgage REITs offer higher earning potential but also present a higher level of risk. The annual dividend yield of MORT is significantly higher than any of the other funds on our list, so it’s easy to see why this fund is attractive.

VanEck Vectors Mortgage REIT Income ETF Details

Price: $19.14
Expense Ratio: 0.40%
Annual Dividend Yield:
7.10%
1 Year Return: 32.04%
3 Year Return: 7.78%
5 Year Return: 33.65%

12. US Diversified Real Estate ETF (PPTY)

PPTY attempts to track the returns of the U.S. Diversified Real Estate Index™ (USREX). As you can tell from the name, this fund offers diversification, which will be attractive to many investors. You’ll get exposure to residential real estate, offices, and industrial properties. It’s a multi-cap ETF with holdings in companies of all sizes. You’ll get diversity in terms of property types, location, and company size.

This is a newer fund that began in 2018, so the history is limited to just a few years.

US Diversified Real Estate ETF Details

Price: $38.22
Expense Ratio: 0.49%
Annual Dividend Yield:
2.75%
1 Year Return: 33.29%
3 Year Return: 52.61%
5 Year Return: N/A

13. Nuveen Short-Term REIT ETF (NURE)

NURE is another ETF that has only been around for a few years. The fund seeks to track the results of the Dow Jones U.S. Select Short-Term REIT Index. Since the focus is investments with short-term leases, most of the holdings are REITs that focus on apartment buildings, self-storage facilities, and hotels.

With inflation becoming a more significant concern, short-term leases can be attractive because they provide the opportunity for increased rental income as rent rises. NURE has produced some of the best returns in the industry over the past year thanks to the hot real estate market and current economic conditions.

Nuveen Short-Term REIT ETF Details

Price: $38.49
Expense Ratio: 0.35%
Annual Dividend Yield:
2.05%
1 Year Return: 46.37%
3 Year Return: 58.86%
5 Year Return: N/A

Real Estate Crowdfunding

Real estate crowdfunding platforms offer another way to passively invest in the real estate sector, with many of the same benefits as real estate ETFs. Let’s quickly look at some of the leading crowdfunding platforms your might want to consider.

Fundrise

Fundrise is probably the most popular real estate crowdfunding platform, and it’s one of the best options for those who are new to real estate investing. Unlike some other crowdfunding platforms, you won’t invest in a single property or project. Instead, Fundrise pools investor money and you’ll own a share in a diversified portfolio of income-generating properties, providing instant diversification.

There’s a lot to like about Fundrise. You can invest in their starter portfolio with as little as $10, or invest at least $5,000 to get access to one of their core portfolios: income, growth, or balanced. You’ll have the option to receive dividends as cash (transferred to your bank account), or have the dividends automatically reinvested.

Fundrise also has a very user-friendly platform that makes it easy to track and manage your real estate investment. With an average return of around 8-10%, Fundrise is a solid choice for almost any investor.

Groundfloor

Groundfloor is another popular choice for new real estate investors, and you can get started with as little as $10. The main difference between Fundrise and Groundfloor is that with Groundfloor, you’ll invest in specific properties (mostly house flips). You’ll be able to see all the details of each opportunity and choose the projects you want to invest in. Alternatively, you can set parameters and have Groundfloor automatically invest in projects that are a match.

Historically, Groundfloor has produced average returns exceeding 10% per year. These are short-term loans that are typically anywhere from a few months to one year long, so you’re money won’t be tied up for a long time.

Arrived

Arrived is a newer platform that focuses on rental properties. If you’ve always wanted to own a rental property but you don’t want the work that comes with managing property or dealing with tenants, Arrived could be the perfect solution.

It’s similar to Groundfloor in that you’ll choose the specific properties you want to invest in. Arrived allows you to earn ongoing rental income by owning a share of a rental property with an investment of as little as $100. Income investors will love the ability to earn rental income with the responsibilities of being a landlord.

Final Thoughts on the Best Real Estate and REIT ETFs

If you’re looking to add real estate exposure to your investment portfolio, consider the best real estate and REIT ETFs featured above. Instead of investing all your money in the stock market, you’ll get some diversification, along with plenty of upside potential, by investing in the best REIT ETFs. We’ve provided details to help make your decision easier, but be sure to do your own research and due diligence to find the best exchange-traded fund for your own situation.



Similar Posts

Disclosure: Information presented on Vital Dollar and through related email marketing is intended for informational purposes only and is not meant to be taken as financial advice. Please see our Disclosure for further information.