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.
Buy RDOG Stock – Trade for Free
ALPS ETF Trust ALPS REIT Dividend Dogs ETF
Buy KBWY Stock – Trade for Free
Invesco KBW Premium Yield Equity REIT ETF
Buy ROOF Stock – Trade for Free
IQ US Real Estate Small Cap ETF
Buy SRET Stock – Trade for Free
Global X SuperDividend REIT ETF
Buy NETL Stock – Trade for Free
NETLease Corporate Real Estate ETF
Buy PPTY Stock – Trade for Free
PPTY U.S. Diversified Real Estate ETF
Buy REZ Stock – Trade for Free
iShares Residential and Multisector Real Estate ETF
Buy OLD Stock – Trade for Free
The Long-Term Care ETF
Buy RWX Stock – Trade for Free
SPDR DJ Wilshire Intl Real Estate
Buy CHIR Stock – Trade for Free
Global X Funds Global X MSCI China Real Estate ETF
Buy DRN Stock – Trade for Free
Direxion Daily Real Estate Bull 3x Shares
Buy EWRE Stock – Trade for Free
Invesco S&P 500 Equal Weight Real Estate ETF
Buy HAUZ Stock – Trade for Free
Xtrackers International Real Estate ETF
Buy GQRE Stock – Trade for Free
FlexShares Global Quality Real Estate Index Fund
Buy RWO Stock – Trade for Free
SPDR DJ Wilshire Global Real Estate ETF
Buy DRW Stock – Trade for Free
WisdomTree Global ex-US Real Estate Index
Buy REET Stock – Trade for Free
iShares Trust iShares Global REIT ETF
Buy FFR Stock – Trade for Free
First Trust FTSE EPRA/NAREIT Global Real Estate Index Fund
Buy VNQI Stock – Trade for Free
Vanguard Global ex-U.S. Real Estate ETF
Buy IFGL Stock – Trade for Free
iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index Fund
Buy DRV Stock – Trade for Free
Drexion Daily Real Estate Bear 3x Shares
Buy SRVR Stock – Trade for Free
Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF
Buy SRS Stock – Trade for Free
ProShares UltraShort Real Estate
Buy REK Stock – Trade for Free
ProShares Short Real Estate
Buy INDS Stock – Trade for Free
Pacer Benchmark Industrial Real Estate SCTR ETF
Buy XLRE Stock – Trade for Free
Real Estate Select Sector SPDR Fund (The)
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.
Aftermarket Real Estate ETFs
Take a look at the positions of real estate ETFs after major stock exchanges are closed for trading.
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)
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%.
2. Invesco Active U.S. Real Estate Fund (NYSE ARCA: PSR)
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%.
3. iShares Cohen & Steers REIT ETF (BATS: ICF)
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%.
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 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.
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.
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.
Benzinga's #1 Breakout Stock Every Month
Looking for stocks that are about to breakout for gains of 10%, 15%, even 20% potentially or more? The only problem is finding these stocks takes hours per day. Fortunately, Benzinga's Breakout Opportunity Newsletter that could potentially break out each and every month. You can today with this special offer: