Top 10 U.S. Real Estate Sector ETFs

#5: First Trust REIT ETF (FRI)

FRI follows the S&P United States REIT Index measures the investable U.S. REIT market. The fund was launched in May 2007. The expense ratio is .50%. AUM are just under $403 million and average daily trading volume is around 260K shares.

As of early February 2012 the annual dividend yield was 2.20% with YTD return 9.17. The one year return was 13.54%.

Data as of First Quarter 2012

FRI Top Ten Holdings & Weightings

1. Simon Property Group Inc (SPG): 10.37%

2. Public Storage (PSA): 5.31%

3. Equity Residential (EQR): 4.65%

4. HCP Inc (HCP): 4.47%

5. Ventas Inc (VTR): 4.31%

6. Boston Properties Inc (BXP): 3.98%

7. Vornado Realty Trust (VNO): 3.90%

8. ProLogis Inc (PLD): 3.63%

9. AvalonBay Communities Inc (AVB): 3.33%

10. Host Hotels & Resorts Inc (HST): 2.84%

#4: SPDR DJ Wilshire REIT ETF (RWR)

RWR follows the Dow Jones U.S. Select REIT Index consists primarily of REITs in commercial real estate. The fund was launched in April 2001. The expense ratio is .25%. AUM equal $1.4 billion and average daily trading volume is 323K shares. As of early February 2012 the annual dividend yield was 3.15% with YTD return 9.30%. The one year return was 14.62%.

Data as of First Quarter 2012

RWR Top Ten Holdings & Weightings

1. Simon Property Group Inc (SPG): 11.26%

2. Public Storage (PSA): 5.65%

3. HCP Inc (HCP): 5.01%

4. Equity Residential (EQR): 5.01%

5. Boston Properties Inc (BXP): 4.32%

6. Ventas Inc (VTR): 4.31%

7. Vornado Realty Trust (VNO): 4.22%

8. ProLogis Inc (PLD): 3.91%

9. AvalonBay Communities Inc (AVB): 3.66%

10. Host Hotels & Resorts Inc (HST): 3.11%

#3; iShares Cohen & Steers Major Real Estate ETF (ICF)

ICF follows the Cohen & Steers Realty Majors Index which consists of selected REITs. The fund was launched in January 2001. The expense ratio is .35%.

AUM equal $2.3 billion and average daily trading volume is 826K shares. As of early February 2012 the annual dividend yield was 2.97% with YTD return 8.74%. The one year return was 14.41%.

 

Data as of First Quarter 2012

ICF Top Ten Holdings & Weightings

1. Simon Property Group Inc (SPG): 7.89%

2. Public Storage (PSA): 7.65%

3. Equity Residential (EQR): 6.79%

4. HCP Inc (HCP): 6.78%

5. Ventas Inc (VTR): 6.38%

6. Boston Properties Inc (BXP): 5.88%

7. Vornado Realty Trust (VNO): 5.70%

8. ProLogis Inc (PLD): 5.25%

9. AvalonBay Communities Inc (AVB): 4.94%

10. Host Hotels & Resorts Inc (HST): 4.20%

#2: iShares DJ U.S. Real Estate ETF (IYR)

IYR 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 February 2012 the annual dividend yield was 4.27% with YTD return 3.83%. The one year return was 10.42%.

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 First Quarter 2012

IYR Top Ten Holdings & Weightings

1. Simon Property Group Inc (SPG): 8.83%

2. American Tower Corp A (AMT): 5.51%

3. Public Storage (PSA): 4.43%

4. HCP Inc (HCP): 3.93%

5. Equity Residential (EQR): 3.93%

6. Annaly Capital Management, Inc. (NLY): 3.62%

7. Boston Properties Inc (BXP): 3.39%

8. Ventas Inc (VTR): 3.38%

9. Vornado Realty Trust (VNO): 3.31%

10. ProLogis Inc (PLD): 3.07%

#1: Vanguard REIT ETF (VNQ)

VNQ 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 February 2012 the annual dividend yield was 3.55% with YTD return 9.17%. The one year return was 14.26%.

 

Data as of First Quarter 2012

VNQ Top Ten Holdings & Weightings

1. Simon Property Group Inc (SPG): 10.33%

2. Public Storage (PSA): 5.17%

3. Equity Residential (EQR): 4.89%

4. HCP Inc (HCP): 4.56%

5. Ventas Inc (VTR): 4.33%

6. Boston Properties Inc (BXP): 4.15%

7. Vornado Realty Trust Shs of Benef Int (VNO): 3.96%

8. ProLogis Inc (PLD): 3.53%

9. AvalonBay Communities Inc (AVB): 3.43%

10. Health Care REIT, Inc. (HCN): 2.65%

REITs have regained their popularity from investors seeking income. Some residential oriented REITs have done extremely well but some are suggesting owning versus renting is now becoming the more attractive alternative. It remains to be seen if this bears out over time. Remember many REIT structures allow for return of principal which may have negative tax consequences to unaware investors.

It's also important to remember that ETF sponsors have their own competitive business interests when issuing products which may not necessarily align with your investment needs. New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

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The ETF Digest is long VNQ.

(Source for data is from ETF sponsors and various ETF data providers)

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.

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