Top Real Estate ETFs Right Now

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Contributor, Benzinga
May 1, 2020

Real estate is among the hottest investments you can make today. But it’s also one of the most expensive investment options in the market — the median price of a home in the U.S. is $249,000. If you don’t have that kind of capital or down payment to start investing, real estate exchange-traded funds (ETFs) provide a good alternative. 

Real estate ETFs offer you a low-cost entry into a diverse portfolio of real estate companies. These ETFs hold assets in companies that own, develop or manage residential and commercial properties. 

ETFs from the real estate sector also invest in real estate investment trusts (REITs), which are companies that own and operate income-producing real estate or related assets. They may include office buildings, apartments, hotels, storage facilities, warehouses and more. 

Real Estate ETFs Biggest Gainers and Losers

Here’s an overview of real estate ETFs on the stock market with the best profits and worst losses. 

Premarket Real Estate ETFs

Here’s a quick look at the premarket positions of real estate ETFs to help you predict price movements during trading sessions. 

Stock Movers

Gainers

TickerCompany±%Buy Stock
DRNDirexion Daily Real Estate Bull 3X Shares$7.251.11%892.8KBuy/Sell
DRVDirexion Daily Real Estate Bear 3X Shares$47.200.38%244.7KBuy/Sell
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Loser

TickerCompany±%Buy Stock
VNQVanguard Real Estate ETF$78.24-0.49%4.9MBuy/Sell
XLREReal Estate Select Sector SPDR Fund (The)$35.73-0.03%7.8MBuy/Sell
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Session: Apr 18, 2024 4:00PM EDT - Apr 19, 2024 9:29AM EDT

Aftermarket Real Estate ETFs

Take a look at the positions of real estate ETFs after major stock exchanges are closed for trading.  

Stock Movers

Gainers

TickerCompany±%Buy Stock
DRNDirexion Daily Real Estate Bull 3X Shares$7.330.96%892.8KBuy/Sell
SCHHSchwab U.S. REIT ETF$18.700.21%3.5MBuy/Sell
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Loser

TickerCompany±%Buy Stock
KBWYInvesco KBW Premium Yield Equity REIT ETF$17.05-0.3%86KBuy/Sell
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Session: Apr 19, 2024 4:00PM EDT - Apr 19, 2024 7:59PM EDT

Why Invest in Real Estate ETFs?

Here are the 3 top reasons you should consider investing in real estate ETFs. 

1. Backed by Physical Properties 

One of the biggest advantages of owning shares in a real estate ETF is that your investments are backed by physical assets in the real world. These ETFs primarily hold assets in REITs and invest in properties such as houses, apartments, villas, condos, office spaces, hotels, restaurants, retail outlets, manufacturing units, warehouse facilities and more.

Unlike real estate properties, you can buy and sell shares of a real estate ETF at a moment’s notice. You can also earn returns on your investment without having to deal with the stress of managing a property. 

2. High Potential for Growth 

When the markets are on the rise, company stocks and real estate ETFs gain value. But when the market goes down, non-real estate company stocks can tank and even make enterprises go bankrupt. Real estate ETFs with underlying properties could still hold the intrinsic value of the land. 

Rental agreements from real estate property owners typically increase every year through rent and leasing rates. In the long run, all of these minute details can neutralize any volatility from your investments in real estate ETFs.  

3. Can Offer a High Yield

Real estate ETFs share most of their earned income with their shareholders as dividends. 

Some of the ETFs from the real estate sector can offer you a high-yield of 10% and above. For instance, an investment in the iShares Mortgage Real Estate ETF (NASDAQ: REM) will give you an annual dividend yield of 17.21%. The Global X SuperDividend REIT ETF (NASDAQ: SRET) is another example, with an annual dividend yield of 16.52%.     

Top 3 Real Estate ETFs by AUM

On many occasions, real estate ETFs that focus on REITs have outperformed other benchmark indices such as the S&P 500. Some REIT-based ETFs even beat the performance of S&P 500 during the 2008 recession. 

Consider key factors such as expense ratios, annual dividend yield, index performance, historical return record and assets under management (AUM) before you invest in real estate ETFs. Based on these criteria, you can take a look at these ETFs for potential investments. 

1. iShares Residential Real Estate ETF (NYSE ARCA: REZ)

$68.94
0.29[0.42%]
Last update: 8:00PM (Delayed 15-Minutes)
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Open68.800Close68.940
Vol / Avg.37.887K / 44.587KMkt Cap-
Day Range68.730 - 69.29052 Wk Range60.639 - 76.340

iShares Residential Real Estate ETF has been on the market since 2007. It corresponds to the FTSE NAREIT All Residential Capped Index and offers exposure to residential real estate, healthcare and self-storage units of the U.S. equity market. This ETF has a total of 44 holdings from small-cap, mid-cap and large-cap companies.

iShares Residential Real Estate ETF has an expense ratio of 0.48%. It has a total AUM of $347 million and an annual dividend yield of 3.71%. This ETF trades more than 50,000 shares per day. iShares Residential Real Estate ETF has a 3-year return rate of 3.37% and a 5-year return rate of 16.99%.

Historical performance of iShares Residential Real Estate ETF. Source: NASDAQ 

2. Invesco Active U.S. Real Estate Fund (NYSE ARCA: PSR)

$80.4165
0.3775[0.47%]
Last update: 8:00PM (Delayed 15-Minutes)
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Open80.460Close80.417
Vol / Avg.2.252K / 6.676KMkt Cap-
Day Range80.250 - 80.50052 Wk Range74.410 - 92.559

Launched in 2008, Invesco Active U.S. Real Estate Fund has an expense ratio of 0.35%. It tracks the FTSE NAREIT Equity REITs Index and has holdings in real estate investment trusts within the U.S. equity market. 

Invesco Active U.S. Real Estate Fund has a total AUM of $110 million. It has an annual dividend yield of 3.81% and an annual dividend rate of $2.98 per share. This ETF has an average monthly trade volume of 16,500 shares. This fund has a 3-year return rate of 9.59% and a 5-year return rate of 21.39%. 

Historical performance of Invesco Active U.S. Real Estate Fund over the last 5 years. Source: NASDAQ

3. iShares Cohen & Steers REIT ETF (BATS: ICF)

$52.98
0.28[0.53%]
Last update: 8:00PM (Delayed 15-Minutes)
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Open52.730Close52.980
Vol / Avg.409.836K / 151.123KMkt Cap-
Day Range52.700 - 53.17052 Wk Range47.230 - 59.850

iShares Cohen & Steers REIT ETF has a total AUM of $1.8 billion. It mirrors the Cohen & Steers Realty Majors Index and holds assets in 31 mid-cap and large-cap companies from the REIT sector of the U.S. equity market. 

The REIT ETF has an expense ratio of 0.34%. It has high liquidity with an average of 148,443 shares traded every month. This ETF also has a 3-year return rate of 9.82% and a 5-year return rate of 19.57%. iShares Cohen & Steers REIT ETF has an annual dividend yield of 2.90%. 

Historical performance of iShares Cohen & Steers REIT ETF. Source: NASDAQ

Best Online Brokers for Real Estate ETFs

An online broker can help you find the top ETFs to trade. Most online brokers let you trade ETFs commission-free. Benzinga has curated the best online brokers to get you started. 

TradeStation
Best For
  • Futures Trading
securely through TradeStation's website

1. TradeStation

TradeStation is the preferred online broker for over 99,000 people around the globe. You can open a TS GO account with a $0 minimum deposit or a TS SELECT account with a $2,000 minimum deposit. 

TradeStation offers diverse opportunities with more than 2,000 ETFs to invest in. It has commission-free pricing plans for real estate ETFs and lets you track indices, sectors, commodities and currencies on the platform. 

Firstrade
Best For
  • Mobile Investing
securely through Firstrade's website

2. Firstrade

Established in 1985, Firstrade has been a leading online broker for more than 3 decades. You can open an account on Firstrade with a $0 minimum deposit. It has an average trade execution speed of 0.1 seconds.

Firstrade offers more than 2,200 ETFs to invest in at a $0 commission fee. There are more than 100 ETF providers listed with details and access to Morningstar coverage. 

TD Ameritrade
Best For
  • Forex and investing app
securely through TD Ameritrade's website

3. TD Ameritrade

With a total of $1 trillion in assets, TD Ameritrade is the preferred online broker for 11 million traders. You can open an account with a $0 minimum deposit on the platform. 

TD Ameritrade offers commission-free ETFs for you to trade, except for broker-assisted investments that are priced at $25 per trade. With the ETF Comparison Tool, you have the advantage of finding ETFs that match your financial goals based on performance, cost and 3rd-party analysts rankings. 

Trade Properties Without the Pinch

Real estate ETFs make it possible to let you buy and sell assets such as properties in a pinch and at affordable rates without the risk. If you’re looking for something a bit more diversified (unlike picking stocks or trading penny stocks) you could add real estate ETFs to your portfolio.