Equity: U.S. Real Estate

KBWY Top Performer Intra-day
Price $37.78
Today’s Change +0.32%(0.85)
4:00pm 01/23/2017
USRT Bottom Performer Intra-day
Price 0.00
Today’s Change 0.00%(0.00)
  • 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 01/23/17)

All Funds (18)

FREL $248.05 M 248045300 N/A

A 96
E
93
93
T
93
93
F
96
96

IYR $4.29 B 4294133640 Liquid but expensive to hold

A 95
E
88
88
T
99
99
F
95
95

VNQ $33.63 B 33630940584.99 Liquid and cheap to hold

A 91
E
95
95
T
98
98
F
91
91

RWR $3.28 B 3278182465.005 Liquid

A 88
E
93
93
T
97
97
F
88
88

SCHH $2.89 B 2890661437.3 very low holding cost

A 88
E
96
96
T
98
98
F
88
88

ICF $3.44 B 3440032940 large and liquid

A 83
E
91
91
T
96
96
F
83
83

USRT $78.26 M 78261120 low fee

B 92
E
94
94
T
70
70
F
92
92

FRI $239.47 M 239470446.052 stable but not cheap to hold

B 91
E
87
87
T
97
97
F
91
91

REZ $378.75 M 378746220 decent AUM and liquidity

B 70
E
85
85
T
94
94
F
70
70

KBWY $230.76 M 230764000 Dividend-focused

B 50
E
90
90
T
76
76
F
50
50

PSR $26.32 M 26315800 Dear to hold; hard to trade

C 92
E
74
74
T
62
62
F
92
92

WREI $23.38 M 23381000 low AUM; low trade volume

C 89
E
86
86
T
41
41
F
89
89

ROOF $88.9 M 88898700 pricey

C 66
E
80
80
T
71
71
F
66
66

XLRE $2.34 B 2335067262.45 new, trade with care

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

RORE $4.54 M 4542180 N/A

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

EWRE $28.83 M 28828800 new; trade with care

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

NURE $6.24 M 6242575 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 01/19/17

Equity: U.S. Real Estate

Performance Dispersion
Performance  [as of 01/20/17] 1 Month 3 Month YTD 1 Year 3 Years 5 Years 10 Years
Benchmark: Thomson Reuters US Residential & Commercial REITs1.20%0.65%0.85%19.67%11.75%10.47%--
A 95.892185FREL248045300FRELFidelity MSCI Real Estate Index ETF1.12%0.90%0.60%18.44%------
A 94.870405IYR4294133640IYRiShares U.S. Real Estate ETF0.95%0.56%0.64%17.42%10.57%9.82%3.05%
A 91.435357VNQ33630940584.99VNQVanguard REIT Index Fund1.41%1.32%0.74%17.99%12.39%11.25%4.79%
A 88.219112RWR3278182465.005RWRSPDR Dow Jones REIT ETF0.69%1.26%0.13%15.01%12.50%10.80%3.98%
A 88.175948SCHH2890661437.3SCHHSchwab U.S. REIT ETF0.69%1.17%0.19%15.18%12.64%10.95%--
A 82.609201ICF3440032940ICFiShares Cohen & Steers REIT ETF1.23%0.90%0.64%13.03%13.18%10.47%3.26%
B 92.387699USRT78261120USRTiShares Core U.S. REIT ETF1.71%2.31%1.13%18.11%12.20%10.34%--
B 91.392666FRI239470446.052FRIFirst Trust S&P REIT Index Fund1.24%1.20%0.56%17.16%11.77%10.67%--
B 69.894467REZ378746220REZiShares Residential Real Estate Capped ETF0.73%0.07%-0.71%8.40%13.95%11.00%--
B 50.473754KBWY230764000KBWYPowerShares KBW Premium Yield Equity REIT Portfolio0.86%9.35%0.09%47.85%14.26%14.91%--
C 92.025334PSR26315800PSRPowerShares Active US Real Estate Fund1.43%0.40%3.02%17.85%12.00%9.91%--
C 89.471219WREI23381000WREIWilshire US REIT ETF1.81%2.42%1.14%15.34%12.80%11.38%--
C 66.158132ROOF88898700ROOFIQ US Real Estate Small Cap ETF-0.06%3.38%-0.60%33.91%9.53%14.01%--
N/A 0XLRE2335067262.45XLREReal Estate Select Sector SPDR Fund0.55%-0.51%0.49%12.33%------
N/A 0RORE4542180ROREHartford Multifactor REIT ETF0.33%4.60%2.01%--------
N/A 0EWRE28828800EWREGuggenheim S&P 500 Equal Weight Real Estate ETF0.68%1.23%0.40%7.03%------
N/A 0NURE6242575NURENuShares Short-Term REIT ETF-0.85%--0.02%--------
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 01/23/17)

All Funds (18)

96
96.099858
95
94.959408
94
93.597856
93
93.435469
93
92.90567
91
90.692123
90
90.16078
88
87.57666
87
87.393965
86
86.141922
85
85.289532
80
80.061841
74
73.622809
N/A
0
N/A
0
N/A
0
N/A
0
87
86.921127334685

ETF.com Grade as 01/19/17

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
ICF iShares Cohen & Steers REIT ETF 0.35% -0.39% -0.26% -0.52% 20.00% / 39.60% Low 90.692123
RORE Hartford Multifactor REIT ETF 0.45% -- -- -- -- / -- N/A 0
IYR iShares U.S. Real Estate ETF 0.44% -0.51% -0.37% -0.65% 20.00% / 39.60% Low 87.57666
USRT iShares Core U.S. REIT ETF 0.08% -0.41% -0.18% -0.56% 20.00% / 39.60% Low 93.597856
KBWY PowerShares KBW Premium Yield Equity REIT Portfolio 0.35% -0.32% -0.20% -0.59% 20.00% / 39.60% Low 90.16078
NURE NuShares Short-Term REIT ETF 0.35% -- -- -- 20.00% / 39.60% Low 0
PSR PowerShares Active US Real Estate Fund 0.80% -- -- -- 20.00% / 39.60% Low 73.622809
REZ iShares Residential Real Estate Capped ETF 0.48% -0.18% 0.13% -0.61% 20.00% / 39.60% Low 85.289532
ROOF IQ US Real Estate Small Cap ETF 0.70% -0.96% -0.52% -1.42% 20.00% / 39.60% Low 80.061841
RWR SPDR Dow Jones REIT ETF 0.25% -0.30% -0.18% -0.41% 20.00% / 39.60% Low 92.90567
EWRE Guggenheim S&P 500 Equal Weight Real Estate ETF 0.40% -- -- -- 20.00% / 39.60% Medium 0
SCHH Schwab U.S. REIT ETF 0.07% -0.14% -0.07% -0.27% 20.00% / 39.60% Low 96.099858
FREL Fidelity MSCI Real Estate Index ETF 0.08% -- 100.00% -- 20.00% / 39.60% Low 93.435469
VNQ Vanguard REIT Index Fund 0.12% -0.16% -0.06% -0.19% 20.00% / 39.60% Low 94.959408
FRI First Trust S&P REIT Index Fund 0.48% -0.55% -0.41% -0.70% 20.00% / 39.60% Low 87.393965
WREI Wilshire US REIT ETF 0.32% -0.41% -0.18% -0.64% 20.00% / 39.60% Medium 86.141922
XLRE Real Estate Select Sector SPDR Fund 0.14% -- -- -- 20.00% / 39.60% Low 0
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 01/23/17)

All Funds (18)

99
99.05342
98
98.488581
98
97.913891
97
97.228727
97
96.933808
96
96.428106
94
94.321408
93
93.077025
76
76.26218
71
71.409746
70
70.142383
62
62.273985
41
40.941274
N/A
0
N/A
0
N/A
0
N/A
0
72
72.240478731033

ETF.com Grade as 01/19/17

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
KBWY PowerShares KBW Premium Yield Equity REIT Portfolio $1.71 M 0.24% 0.93 100.00% 1.29% 0.03% None 76.26218
PSR PowerShares Active US Real Estate Fund $75.61 K 0.28% 0.02 100.00% 0.14% 0.01% None 62.273985
REZ iShares Residential Real Estate Capped ETF $2.15 M 0.08% 0.71 100.00% 0.17% 0.01% None 94.321408
ROOF IQ US Real Estate Small Cap ETF $371.02 K 0.20% 0.27 100.00% 0.23% 0.04% None 71.409746
RWR SPDR Dow Jones REIT ETF $31.28 M 0.06% 6.73 100.00% 0.12% 0.02% None 96.933808
SCHH Schwab U.S. REIT ETF $25.57 M 0.04% 12.52 100.00% 0.05% 0.01% None 98.488581
VNQ Vanguard REIT Index Fund $324.1 M 0.02% 39.57 100.00% 0.16% 0.00% None 97.913891
WREI Wilshire US REIT ETF $77.65 K 1.55% 0.03 100.00% 0.06% 0.02% None 40.941274
XLRE Real Estate Select Sector SPDR Fund $54.86 M 0.03% 35.28 100.00% 0.05% 0.03% None 0
RORE Hartford Multifactor REIT ETF $0 0.38% 0.00 100.00% 0.25% 0.03% None 0
EWRE Guggenheim S&P 500 Equal Weight Real Estate ETF $244.62 K 0.20% 0.18 100.00% 0.05% 0.04% None 0
USRT iShares Core U.S. REIT ETF $406.13 K 0.35% 0.17 100.00% 0.05% 0.01% None 70.142383
FREL Fidelity MSCI Real Estate Index ETF $2.24 M 0.22% 1.92 100.00% 0.02% 0.04% None 93.077025
NURE NuShares Short-Term REIT ETF $0 0.23% 1.99 100.00% 0.10% 0.04% None 0
FRI First Trust S&P REIT Index Fund $1.74 M 0.07% 1.49 100.00% 0.02% 0.04% None 97.228727
ICF iShares Cohen & Steers REIT ETF $26.87 M 0.06% 5.41 100.00% 0.18% 0.01% None 96.428106
IYR iShares U.S. Real Estate ETF $580.34 M 0.01% 153.29 100.00% 0.07% 0.01% None 99.05342
FTY iShares Real Estate 50 ETF $258.39 K 0.10 100.00% 0.07% 0.01% None 72.240478731033

ETF.com/ Block Liquidity

VNQ
5
4
3
2
1
XLRE
5
4
3
2
1
USRT
5
4
3
2
1
EWRE
5
4
3
2
1
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
WREI
5
4
3
2
1
RORE
5
4
3
2
1
NURE
5
4
3
2
1
PSR
5
4
3
2
1
ROOF
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 01/23/17)

All Funds (18)

96
95.892185
95
94.870405
92
92.387699
92
92.025334
91
91.435357
91
91.392666
89
89.471219
88
88.219112
88
88.175948
83
82.609201
70
69.894467
66
66.158132
50
50.473754
N/A
0
N/A
0
N/A
0
N/A
0
84
84.031709760219

ETF.com Grade as 01/19/17

Equity: U.S. Real Estate