Equity: U.S. Real Estate

NURE Top Performer Intra-day
Price $26.51
Today’s Change 0.00%(0.00)
4:00pm 10/20/2017
ROOF Bottom Performer Intra-day
Price $27.34
Today’s Change -0.31%(-1.12)
3:41pm 10/20/2017
  • Overview
  • Efficiency
  • Tradability
  • Fit

ETF.com Insight

US real estate is a big draw in the ETF world: The segment hosts over $30B in assets. All the biggest fund issuers - and some of the smaller ones - have gotten in on the act, which makesSCHH and RWR track the same Dow Jones index for some interesting, and occasionally redundant, competition. The funds tend to fall into two main categories: traditional cap-weighted funds that offer access to a broad basket of REITs; and alternative funds with niche exposure to small caps, REIT sub-sectors and yield plays.

Many ETFs offer a more or less standard cap-weighted approach to the market, which can make it hard for any one fund to stand out in the crowd. Our Analyst Pick for the segment, VNQ, boasts deep liquidity, tracks an excellent index (and does it exceptionally well) and charges a very competitive expense ratio. The market has put its weight behind it, too: it leads the segment in AUM by far. SCHH has put up a strong challenging bid to VNQ with a tiny fee, a growing asset base and solid exposure. SCHH also challenges RWR head-to-head: Both funds track the same Dow Jones index. There are other strong competitors though. First Trust’s FRI tracks the most diversified real estate index and iShares’ IYR dominates in trading volume.

Among the alternative funds, there are some interesting strategies at play: iShares offered 3 funds that target real estate subsectors, but investor interest is uneven. Only REZ has a strong asset base. KBWY weights its stocks by dividend yield; ROOF holds just small-cap REITs; and PowerShares’ PSR eschews index tracking in favor of actively managing its holdings. These funds offer alternatives for investors with nuanced views on where real estate is headed, but generally don’t match the size and liquidity of the vanilla offerings. (Insight updated 10/20/17)

All Funds (18)

IYR $4.27 B 4266507000 Liquid but expensive to hold

A 84
E
88
88
T
99
99
F
84
84

FREL $406.43 M 406430150 N/A

A 81
E
95
95
T
96
96
F
81
81

VNQ $34.99 B 34986125351.98 Liquid and cheap to hold

A 79
E
94
94
T
98
98
F
79
79

SCHH $3.74 B 3743335339.65 very low holding cost

A 75
E
97
97
T
98
98
F
75
75

RWR $2.86 B 2858958344.9446 Liquid

A 74
E
93
93
T
97
97
F
74
74

ICF $3.24 B 3240162420 large and liquid

A 72
E
91
91
T
97
97
F
72
72

USRT $175.01 M 175013650 low fee

B 79
E
94
94
T
75
75
F
79
79

FRI $176.29 M 176289397.326 stable but not cheap to hold

B 78
E
87
87
T
89
89
F
78
78

REZ $376.53 M 376533280 decent AUM and liquidity

B 58
E
86
86
T
91
91
F
58
58

KBWY $389.37 M 389374800 Dividend-focused

B 41
E
91
91
T
81
81
F
41
41

PSR $24.29 M 24293700 Dear to hold; hard to trade

C 79
E
72
72
T
65
65
F
79
79

WREI $19.05 M 19048800 low AUM; low trade volume

C 75
E
83
83
T
41
41
F
75
75

ROOF $117.48 M 117478500 pricey

C 58
E
80
80
T
73
73
F
58
58

NURE $6.63 M 6626425 N/A

F 44
E
55
55
T
59
59
F
44
44

EWRE $25.05 M 25047000 new; trade with care

N/A 0
E
0
-1
T
0
-1
F
0
-1

XLRE $2.42 B 2417304597 new, trade with care

N/A 0
E
0
-1
T
0
-1
F
0
-1

RORE $9.52 M 9521160 N/A

N/A 0
E
0
-1
T
0
-1
F
0
-1

FTY $67.13 M 67131400 not cheap

B 84
E
87
87
T
72
72
F
84
84

ETF.com Grade as 10/12/17

Equity: U.S. Real Estate

Performance Dispersion
Performance  [as of 10/19/17] 1 Month 3 Month YTD 1 Year 3 Years 5 Years 10 Years
Benchmark: Thomson Reuters US Residential & Commercial REITs--------------
A 83.603099IYR4266507000IYRiShares U.S. Real Estate ETF--------------
A 81.340065FREL406430150FRELFidelity MSCI Real Estate Index ETF--------------
A 79.206739VNQ34986125351.98VNQVanguard REIT ETF--------------
A 74.573352SCHH3743335339.65SCHHSchwab U.S. REIT ETF--------------
A 74.420535RWR2858958344.9446RWRSPDR Dow Jones REIT ETF--------------
A 71.867408ICF3240162420ICFiShares Cohen & Steers REIT ETF--------------
B 79.112262USRT175013650USRTiShares Core U.S. REIT ETF--------------
B 78.460709FRI176289397.326FRIFirst Trust S&P REIT Index Fund--------------
B 57.96574REZ376533280REZiShares Residential Real Estate Capped ETF--------------
B 41.117712KBWY389374800KBWYPowerShares KBW Premium Yield Equity REIT Portfolio--------------
C 78.692712PSR24293700PSRPowerShares Active US Real Estate Fund--------------
C 75.428736WREI19048800WREIWilshire US REIT ETF--------------
C 57.679628ROOF117478500ROOFIQ U.S. Real Estate Small Cap ETF--------------
F 43.664757NURE6626425NURENuShares Short-Term REIT ETF--------------
N/A 0EWRE25047000EWREGuggenheim S&P 500 Equal Weight Real Estate ETF--------------
N/A 0XLRE2417304597XLREReal Estate Select Sector SPDR Fund--------------
N/A 0RORE9521160ROREHartford Multifactor REIT ETF--------------
B 84.031709760219FTY67131400FTYiShares Real Estate 50 ETF-7.53%-12.02%1.80%4.21%9.11%10.55%--
All returns over 1 year are annualized. All returns are total returns unless otherwise stated.

ETF.com Efficiency Insight

Differences in fees set funds apart in US real estate, as does closure risk from low assets.

The segment offers several extremely low-priced funds: Charles Schwab’s SCHHSCHH does a great job delivering its index with minimal costs and risks leads the pack with a segment low expense ratio. VNQ is also well-priced and RWR is also reasonable. These funds track their indexes well, with typical holding costs that are in line with their fees.

After that, things get a bit pricier. The iShares funds in the segment charge a bit more, leaving them much less competitive on price. Alternative funds (with the exception of KBWY) charge the highest fees, topped by PSR, though they hope to lure investors through their investment strategies, not on price alone. Tracking error tends to be less of an issue in this segment, as many of the funds hew tightly to their indexes, which is a plus to investors. All of the top-scoring funds (RWR, SCHH, and especially VNQ) track their indexes extremely well, but some funds, ROOF for instance, have wobbly tracking that makes costs of ownership harder to forecast.

There’s more concern regarding fund-closure risk, leaving WREI with high closure risk.

Still, the segment contains many funds, led by SCHH, which do a great job delivering their index with minimal costs and risks. (Insight updated 10/20/17)

All Funds (18)

97
96.980367
95
95.221007
94
93.948589
94
93.649456
93
92.985502
91
91.203837
91
90.75807
88
87.718482
87
87.380097
86
85.632044
83
82.76859
80
79.616306
72
72.253842
55
55.485056
N/A
0
N/A
0
N/A
0
87
86.921127334685

ETF.com Grade as 10/12/17

Equity: U.S. Real Estate

Tracking Difference (12 Month)

Ticker Expense Ratio Median Max. Upside Max. Downside Max LT/ST Cap Gains Rate Rule Legal Structure Fund Closure Risk Efficiency
EWRE Guggenheim S&P 500 Equal Weight Real Estate ETF 0.40% -- -- -- 20.00% / 39.60% High 0
SCHH Schwab U.S. REIT ETF 0.07% -0.21% -0.08% -0.29% 20.00% / 39.60% Low 96.980367
FREL Fidelity MSCI Real Estate Index ETF 0.08% -0.13% -0.01% -0.26% 20.00% / 39.60% Low 95.221007
VNQ Vanguard REIT ETF 0.12% -0.09% -0.05% -0.13% 20.00% / 39.60% Low 93.948589
FRI First Trust S&P REIT Index Fund 0.49% -0.50% -0.43% -0.63% 20.00% / 39.60% Low 87.380097
WREI Wilshire US REIT ETF 0.32% -0.42% -0.33% -0.53% 20.00% / 39.60% High 82.76859
XLRE Real Estate Select Sector SPDR Fund 0.14% -- -- -- 20.00% / 39.60% Low 0
ICF iShares Cohen & Steers REIT ETF 0.34% -0.34% -0.30% -0.45% 20.00% / 39.60% Low 90.75807
RORE Hartford Multifactor REIT ETF 0.45% -- -- -- 20.00% / 39.60% High 0
IYR iShares U.S. Real Estate ETF 0.44% -0.53% -0.44% -0.70% 20.00% / 39.60% Low 87.718482
USRT iShares Core U.S. REIT ETF 0.08% -0.41% -0.18% -0.56% 20.00% / 39.60% Low 93.649456
KBWY PowerShares KBW Premium Yield Equity REIT Portfolio 0.35% -0.48% -0.29% -0.61% 20.00% / 39.60% Low 91.203837
NURE NuShares Short-Term REIT ETF 0.35% -- -- -- 20.00% / 39.60% High 55.485056
PSR PowerShares Active US Real Estate Fund 0.80% -- -- -- 20.00% / 39.60% High 72.253842
REZ iShares Residential Real Estate Capped ETF 0.48% -0.24% 0.13% -0.38% 20.00% / 39.60% Low 85.632044
ROOF IQ U.S. Real Estate Small Cap ETF 0.70% -1.09% -0.76% -1.54% 20.00% / 39.60% Low 79.616306
RWR SPDR Dow Jones REIT ETF 0.25% -0.30% -0.25% -0.42% 20.00% / 39.60% Low 92.985502
FTY iShares Real Estate 50 ETF -0.41% -0.20% -0.57% 20.00% / 39.60% Low 86.921127334685

ETF.com Tradability Insight

US real estate has the incredibly dynamic range of liquidity that’s quite common in the ETF world. Funds range from incredibly liquid to barely trading.

Liquidity giants IYRFunds range from incredibly liquid to barely trading. and VNQ fall squarely in the first camp. The 2 funds trade hundreds of millions of dollars daily at extremely tight spreads. Volume like this is a boon to traders of all sizes from the fast money crowd to do-it-yourselfers.

A solid middle tier of funds also offers ample liquidity for most investors even though they’re not in the league of IYR and VNQ. These include ICF, RWR, SCHH and FRI, each of which trades well each day at reasonable spreads.

FNIO and WREI land at the bottom of the liquidity spectrum. Use care and skill to trade these funds as volume is quite thin. Some of these funds have decent spreads, but bear in mind that these are average inside quoted spreads, so larger market orders could sweep through the thin order book resulting in expensive execution. Use limit orders to stave off this outcome.

For larger investors, block liquidity is generally good, and it's evenly distributed across the range of funds. Creation costs are modest and underlying liquidity ranges from good to fair, with KBWY as the outlier. KBWY's concentrated stake in small- and microcap names gives it a large footprint in underlying markets, so price impact is a concern for creates/redeems. For funds like IYR and VNQ, underlying liquidity is a non-issue given their truly massive on-screen volume. (Insight updated 10/20/17)

All Funds (18)

99
98.902896
98
98.325192
98
97.560283
97
96.997591
97
96.537171
96
96.094625
91
91.248036
89
89.443638
81
81.168648
75
75.230255
73
72.646778
65
64.843265
59
58.976115
41
40.772609
N/A
0
N/A
0
N/A
0
72
72.240478731033

ETF.com Grade as 10/12/17

Equity: U.S. Real Estate

Ticker Median Daily Volume ($) Average Spread Creation Unit/Day Market Hours Overlap Underlying Volume/Unit % Creation Cost Per Unit (%) Impediment to Creations Score - Tradability
EWRE Guggenheim S&P 500 Equal Weight Real Estate ETF $80.03 K 0.19% 0.06 100.00% 0.05% 0.04% None 0
USRT iShares Core U.S. REIT ETF $368.62 K 0.16% 0.15 100.00% 0.06% 0.01% None 75.230255
FREL Fidelity MSCI Real Estate Index ETF $1.95 M 0.11% 1.59 100.00% 0.02% 0.03% None 96.094625
NURE NuShares Short-Term REIT ETF $6.38 K 0.31% 0.00 100.00% 0.12% 0.04% None 58.976115
FRI First Trust S&P REIT Index Fund $747.77 K 0.06% 0.64 100.00% 0.03% 0.04% None 89.443638
ICF iShares Cohen & Steers REIT ETF $13.36 M 0.04% 2.62 100.00% 0.21% 0.00% None 96.537171
IYR iShares U.S. Real Estate ETF $397.57 M 0.01% 98.83 100.00% 0.08% 0.01% None 98.902896
KBWY PowerShares KBW Premium Yield Equity REIT Portfolio $2.05 M 0.13% 1.10 100.00% 1.21% 0.03% None 81.168648
PSR PowerShares Active US Real Estate Fund $56.91 K 0.17% 0.01 100.00% 0.15% 0.01% None 64.843265
REZ iShares Residential Real Estate Capped ETF $1.23 M 0.11% 0.38 100.00% 0.21% 0.01% None 91.248036
ROOF IQ U.S. Real Estate Small Cap ETF $327.66 K 0.12% 0.24 100.00% 0.24% 0.04% None 72.646778
RWR SPDR Dow Jones REIT ETF $8.68 M 0.05% 1.84 100.00% 0.14% 0.02% None 96.997591
SCHH Schwab U.S. REIT ETF $14.04 M 0.04% 6.77 100.00% 0.06% 0.01% None 98.325192
VNQ Vanguard REIT ETF $235.34 M 0.01% 27.98 100.00% 830.27% 0.00% None 97.560283
WREI Wilshire US REIT ETF $31.52 K 0.95% 0.01 100.00% 0.06% 0.02% None 40.772609
XLRE Real Estate Select Sector SPDR Fund $44.62 M 0.03% 27.48 100.00% 0.05% 0.03% None 0
RORE Hartford Multifactor REIT ETF $13.58 K 0.31% 0.00 100.00% 0.31% 0.02% None 0
FTY iShares Real Estate 50 ETF $258.39 K 0.10 100.00% 0.07% 0.01% None 72.240478731033

ETF.com/ Block Liquidity

FREL
5
4
3
2
1
FRI
5
4
3
2
1
ICF
5
4
3
2
1
IYR
5
4
3
2
1
REZ
5
4
3
2
1
RWR
5
4
3
2
1
SCHH
5
4
3
2
1
VNQ
5
4
3
2
1
XLRE
5
4
3
2
1
USRT
5
4
3
2
1
EWRE
5
4
3
2
1
PSR
5
4
3
2
1
ROOF
5
4
3
2
1
WREI
5
4
3
2
1
RORE
5
4
3
2
1
NURE
5
4
3
2
1
KBWY
5
4
3
2
1
FTY
5
4
3
2
1

This measurement shows how easy it is to trade 25,000 shares of each ETF.

ETF.com Fit Insight

Investors have their pick of funds tracking well-designed indexes that largely capture the market return and exposure of US real estate. They also can select from funds that take anThe mainstream funds here generally capture the real estate market for what it is alternate or narrower view of the space.

The mainstream funds here generally capture the real estate market for what it is: a short list of big names (Simon Property Group, American Tower, Public Storage) with dominant market caps, and a large concentration in commercial and residential REITs (a combined 55% of the market roughly) and specialized REITs which include REITs related to anything from hospitals and hotels to railways.

Vanguard’s VNQ tracks the comprehensive MSCI US REIT Index and earns a very high score, but IYR edges it on better balance across the REIT sub-sectors. First Trust’s FRI offers the most diversified portfolio in US real estate, while large-cap-oriented FTY also scores delivers excellent coverage with far fewer names. RWR and SCHH, which both track the Dow Jones U.S. Select REIT Index, earn solid scores as well.

The alternative funds generally don’t capture the market return, nor do they aim to. A low Fit score merely indicates the degree to which they vary from our benchmark in exposure and performance. PowerShares’ KBWY shoots for yield and tilts very, very small along the way, with a large chunk of assets devoted to small- and microcaps. ROOF skews even smaller than KBWY, but it does so with clear purpose. Both funds have high yielding portfolios at present, but their small-cap bias has amped up volatility too.

Other ETFs depart from broad market exposure by parsing the sub-sectors of US real estate—with mixed results. iShares’ REZ, ostensibly a residential real estate fund, suffers for its unexpected sector tilts: The fund has larger portion of assets allocated to specialized REITs than residential REITs. It’s really an ex-commercial REIT play.

Probably the biggest surprise here is that the actively managed fund PSR fits the market quite well, on par with vanilla index-tracking funds. That leaves big questions about what exactly PSR is buying you. The caveat: As an actively managed fund, PSR’s fit to the market could change overnight. (Insight updated 10/20/17)

All Funds (18)

84
83.603099
81
81.340065
79
79.206739
79
79.112262
79
78.692712
78
78.460709
75
75.428736
75
74.573352
74
74.420535
72
71.867408
58
57.96574
58
57.679628
44
43.664757
41
41.117712
N/A
0
N/A
0
N/A
0
84
84.031709760219

ETF.com Grade as 10/12/17

Equity: U.S. Real Estate