5 real estate ETFs outperforming the S&P 500


The real estate sector has shown solid strength so far this year with the broad US REIT – FTSE Nareit Equity REITs Index – climbing 22.8% from the 18.1% gain for the S&P index 500. The outperformance was fueled by falling interest rates and improving economic conditions (read: 5 reasons REITs are on the rise).

Lower rates have made buying real estate and refinancing mortgages more affordable. This, in turn, stimulates activity in the market and real estate stocks. Meanwhile, the US economy has returned to pre-pandemic levels with GDP growing 6.5% per year in the second quarter, indicating a sustained recovery from the pandemic recession. With a rapid vaccination, business reopenings and billions of dollars in government stimulus packages, many analysts expect the economy to grow at a sustained rate of around 7% for all of 2021. That would represent the strongest growth of the calendar year since 1984 and a sharp reversal from the worst economic contraction of 3.4% last year in 74 years.

The growing economy translates into greater demand for real estate, higher occupancy rates, and greater power for landlords to charge higher rents. Rising home prices are also pushing the real estate industry up as more and more consumers turn to rental. Additionally, REITs have benefited from concerns about inflation, as they are often seen as a hedge against inflation.

In addition, the increase in the Delta variant of COVID-19 cases has sparked the call for these assets. Indeed, these often act as a safe haven in times of market turbulence and simultaneously offer higher returns due to their disproportionate returns. REITs own and operate income producing real estate. They are required to distribute at least 90% of taxable income to shareholders each year as dividends and, in turn, can deduct such paid dividends from their taxable corporate income. Thus, REITs offer juicy dividend yields. In addition, REITs have a low correlation with other stocks and bonds, thus providing enormous diversification benefits to the portfolio.

Given the bullish fundamentals, we have highlighted five ETFs that have dominated the space and are showing strong momentum. Any of these could be great choices for investors looking to take advantage of the current market environment (see: all real estate ETFs here).

Nuveen Short-Term REIT ETF NURE – Up 35.5%

This fund tracks the Dow Jones US Select Short-Term REIT Index, which is made up of publicly traded US REITs that concentrate their holdings in apartment buildings, hotels, self-storage facilities and manufactured home properties. , whose leases are shorter than REITs. who invest in other sectors. It has amassed $ 61.4 million in its asset base and trades an average daily volume of 35,000 shares. The ETF holds 35 stocks in its basket and charges 35 basis points in fees per year (read: 2 sector ETFs hovering around historic highs).

Invesco EWRE S&P 500 Equal Weight Real Estate ETF – Up 34%

With assets under management of $ 80.6 million, this ETF also weighs real estate stocks in the S&P 500 Index by tracking the S&P 500 Equal Weight Real Estate Index. He has 30 stocks in his basket and charges 40 basis points in annual fees. The product trades in an average daily volume of 32,000 shares and has a Zacks ETF Rank # 4 (Sell).

IShares REZ Residential and Multisector Real Estate ETF – Up 33.1%

This fund provides exposure to the US residential real estate sector and tracks the FTSE Nareit All Residential Capped Index. He has assets under management of $ 814 million and owns 30 stocks in his basket. The ETF has an expense ratio of 0.48% and an average daily volume of 81,000 shares. He has a Zacks ETF Rank # 3 (Hold) with a medium risk outlook.

Real Estate Select Sector SPDR Fund XLRE – Up 29.9%

This fund provides exposure to real estate management and development companies and REITs, excluding mortgage REITs, by replicating the Real Estate Select Sector index. With $ 4 billion in assets under management, he owns 32 stocks in his basket and charges 12 basis points in annual fees. XLRE has a Zacks ETF Rank # 4 with a high risk outlook.

SPDR Dow Jones REIT ETF RWR – Up 29.7%

This ETF tracks the Dow Jones US Select REIT Index, holding 114 stocks in its basket. It has amassed $ 1.9 billion in its asset base and trades an average of 151,000 shares per day. The fund has a Zacks ETF Rank # 3 with a medium risk outlook.

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SPDR Dow Jones REIT ETF (RWR): ETF Research Reports

Real Estate Select Sector SPDR ETF (XLRE): ETF Research Reports

Invesco S&P 500 Equal Weight Real Estate ETF (EWRE): ETF Research Reports

IShares Residential and Multi-Sector Real Estate ETF (REZ): ETF Research Reports

Nuveen ShortTerm REIT ETF (NURE): ETF Research Reports

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Zacks investment research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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