Options Are Improving for Real Estate ETFs

If you're looking to sink some cash into real estate, exchange-traded funds can offer some choices.

Real estate investment trusts, or REITs, have been red-hot, returning more than 30% in each of the last two years. The surge has cast this humble niche into the spotlight, as more and more investors look to grab a share of the winnings.

But as is the case in so many sectors, the would-be real estate investor confronts an array of ETFs that at first appear more similar than they are different. ETFs, of course, are index funds that trade like stocks. In varying degrees, all four of the real estate investment trust ETFs track seven big REITs -- real estate-focused companies that pass more than 90% of their cash flow through to shareholders through distributions. And though the REIT sector has been growing by leaps and bounds, attracting a host of new players, the group is still small enough that there's plenty of overlap in these indices even beyond the big seven. ...