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Top 10 U.S. Real Estate ETFs

Our goal in this profile is to help investors wade through the many competing ETF offerings available. Using our long experience as an ETF publication, and nearly 40 years in the investment business, we can help select those ETFs that matter and may or may not be repetitive. The result is a more manageable list of issues from which to view and make selections.                     

There is currently an expanding list of nearly 20 ETFs oriented to primarily REITs (Real Estate Investment Trusts) with more on the way. The following analysis features a fair representation of ETFs available. We believe from these investors may choose an appropriate ETF to satisfy the best index-based offerings individuals and financial advisors may utilize.

We're not ranking these ETFs favoring one over another so don't let the listing order mislead you. Although we may use some of these in ETF Digest portfolios it's not our intention to recommend one over another.

ETFs are based on indexes tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones and so forth. Also included are some so-called "enhanced" indexes that attempt to achieve better performance through more active management of the index.

Where competitive issues exist and/or repetitive issues available at a fee cost saving we mention those as other choices. New issues are coming to market consistently (especially globally) and sometimes these issues will need to become more seasoned before they may be included at least in our listings.

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

VNQ (Vanguard REIT ETF) follows the MSCI US REIT Index which covers about 2/3 of all REITs in the U.S. market. The fund was launched in September 2004. The expense ratio is .12%. AUM (Assets under Management) equal $8 billion with average daily trading volume 3M shares. As of early November 2011 the annual dividend was $2.00 making the current yield roughly 3.75% with YTD return 6.24%.


Data as of November 2011

VNQ Top Ten Holdings & Weightings
  1. Simon Property Group Inc (SPG): 9.41%
  2. Equity Residential (EQR): 4.88%
  3. Public Storage (PSA): 4.53%
  4. ProLogis Inc (PLD): 4.50%
  5. Vornado Realty Trust Shs of Benef Int (VNO): 4.26%
  6. Boston Properties Inc (BXP): 4.19%
  7. HCP Inc (HCP): 4.07%
  8. Host Hotels & Resorts Inc (HST): 3.19%
  9. AvalonBay Communities Inc (AVB): 3.06%
  10. Health Care REIT, Inc. (HCN): 2.49%

IYR (iShares DJ U.S. Real Estate ETF) follows the Dow Jones U.S. Real Estate Index which measures the real estate industry primarily through REITs. The fund was launched in June 2000. The expense ratio is .48%. AUM equal nearly $3 million and average daily trading volume is 13.5M shares. As of early November 2011 the annual dividend was $2.18 making the current yield 3.80% and YTD return 3.75%.

For IYR and VNQ inverse and leveraged ETFs are available from Direxion Shares and ProShares which are linked to highly correlated indexes.


Data as of November 2011

IYR Top Ten Holdings & Weightings
  1. Simon Property Group Inc (SPG): 9.05%
  2. Annaly Capital Management, Inc. (NLY): 4.53%
  3. Public Storage (PSA): 4.41%
  4. Equity Residential (EQR): 4.29%
  5. HCP Inc (HCP): 4.00%
  6. Vornado Realty Trust Shs of Benef Int (VNO): 3.86%
  7. Boston Properties Inc (BXP): 3.65%
  8. Ventas Inc (VTR): 3.64%
  9. ProLogis Inc (PLD): 3.13%
  10. AvalonBay Communities Inc (AVB): 3.01%

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