Equity: U.S. Real Estate

PSR Top Performer Intra-day
Price $80.40
Today’s Change +0.41%(0.51)
9:59am 06/27/2017
REZ Bottom Performer Intra-day
Price $65.89
Today’s Change -1.37%(-2.04)
4:00pm 06/27/2017
  • 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 06/27/17)

All Funds (18)

IYR $4.59 B 4593290715 Liquid but expensive to hold

A 96
E
88
88
T
99
99
F
96
96

FREL $289.37 M 289368705 N/A

A 95
E
96
96
T
96
96
F
95
95

VNQ $34.65 B 34652603955.2 Liquid and cheap to hold

A 89
E
95
95
T
98
98
F
89
89

RWR $3.08 B 3079657355.5018 Liquid

A 88
E
93
93
T
97
97
F
88
88

SCHH $3.45 B 3454352721.9 very low holding cost

A 88
E
97
97
T
98
98
F
88
88

ICF $3.34 B 3336219915 large and liquid

A 84
E
91
91
T
97
97
F
84
84

USRT $140.51 M 140510440 low fee

B 90
E
94
94
T
70
70
F
90
90

FRI $205.77 M 205765047.032 stable but not cheap to hold

B 88
E
86
86
T
98
98
F
88
88

REZ $436.9 M 436902050 decent AUM and liquidity

B 73
E
86
86
T
91
91
F
73
73

KBWY $329.5 M 329503800 Dividend-focused

B 45
E
91
91
T
80
80
F
45
45

PSR $27.98 M 27976900 Dear to hold; hard to trade

C 92
E
73
73
T
64
64
F
92
92

WREI $23.99 M 23991500 low AUM; low trade volume

C 89
E
83
83
T
47
47
F
89
89

ROOF $118.98 M 118976850 pricey

C 66
E
80
80
T
77
77
F
66
66

NURE $6.61 M 6605675 N/A

F 59
E
55
55
T
56
56
F
59
59

XLRE $2.3 B 2301675680.85 new, trade with care

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

RORE $10.88 M 10884720 N/A

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

EWRE $26.09 M 26091750 new; trade with care

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 06/22/17

Equity: U.S. Real Estate

Performance Dispersion
Performance  [as of 06/26/17] 1 Month 3 Month YTD 1 Year 3 Years 5 Years 10 Years
Benchmark: Thomson Reuters US Residential & Commercial REITs3.27%5.32%7.43%7.94%9.46%10.31%--
A 96.082979IYR4593290715IYRiShares U.S. Real Estate ETF3.30%5.15%7.26%7.07%8.58%9.90%5.01%
A 94.510567FREL289368705FRELFidelity MSCI Real Estate Index ETF3.23%4.93%6.47%6.91%------
A 88.828403VNQ34652603955.2VNQVanguard REIT ETF3.50%4.49%4.43%4.42%8.94%10.62%6.54%
A 88.317479RWR3079657355.5018RWRSPDR Dow Jones REIT ETF3.56%3.87%2.77%3.46%8.51%9.98%5.57%
A 88.239013SCHH3454352721.9SCHHSchwab U.S. REIT ETF3.58%3.97%2.95%3.57%8.67%10.17%--
A 84.358645ICF3336219915ICFiShares Cohen & Steers REIT ETF3.23%4.50%4.87%3.36%9.67%10.10%5.38%
B 90.265133USRT140510440USRTiShares Core U.S. REIT ETF3.83%4.11%4.63%5.37%9.10%9.67%5.68%
B 88.062974FRI205765047.032FRIFirst Trust S&P REIT Index Fund3.52%3.97%3.62%3.43%8.25%9.97%5.27%
B 73.065487REZ436902050REZiShares Residential Real Estate Capped ETF4.18%6.64%9.42%8.74%12.38%11.76%7.59%
B 44.595304KBWY329503800KBWYPowerShares KBW Premium Yield Equity REIT Portfolio5.12%6.66%5.18%19.94%11.85%15.26%--
C 92.053181PSR27976900PSRPowerShares Active US Real Estate Fund3.03%4.13%8.99%7.40%9.55%10.10%--
C 89.382989WREI23991500WREIWilshire US REIT ETF3.42%3.53%3.38%2.89%8.80%10.46%--
C 66.328314ROOF118976850ROOFIQ US Real Estate Small Cap ETF3.87%5.92%3.66%13.61%7.36%13.45%--
F 58.830985NURE6605675NURENuShares Short-Term REIT ETF3.00%5.75%7.04%--------
N/A 0XLRE2301675680.85XLREReal Estate Select Sector SPDR Fund2.85%4.99%7.72%5.41%------
N/A 0RORE10884720ROREHartford Multifactor REIT ETF3.11%5.12%5.54%--------
N/A 0EWRE26091750EWREGuggenheim S&P 500 Equal Weight Real Estate ETF3.21%4.10%5.90%4.86%------
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 06/27/17)

All Funds (18)

97
96.979189
96
96.115445
95
94.971853
94
93.579796
93
92.898294
91
91.201876
91
90.656103
88
87.670153
86
86.447814
86
85.799272
83
82.569781
80
79.79111
73
72.637409
55
54.522469
N/A
0
N/A
0
N/A
0
87
86.921127334685

ETF.com Grade as 06/22/17

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
KBWY PowerShares KBW Premium Yield Equity REIT Portfolio 0.35% -0.48% -0.29% -0.61% 20.00% / 39.60% Low 91.201876
NURE NuShares Short-Term REIT ETF 0.35% -- -- -- 20.00% / 39.60% High 54.522469
PSR PowerShares Active US Real Estate Fund 0.80% -- -- -- 20.00% / 39.60% High 72.637409
REZ iShares Residential Real Estate Capped ETF 0.48% -0.17% 0.13% -0.38% 20.00% / 39.60% Low 85.799272
ROOF IQ US Real Estate Small Cap ETF 0.70% -1.12% -0.86% -1.54% 20.00% / 39.60% Low 79.79111
RWR SPDR Dow Jones REIT ETF 0.25% -0.32% -0.25% -0.42% 20.00% / 39.60% Low 92.898294
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% -0.20% -0.08% -0.29% 20.00% / 39.60% Low 96.979189
FREL Fidelity MSCI Real Estate Index ETF 0.08% -0.18% -0.09% -0.31% 20.00% / 39.60% Low 96.115445
VNQ Vanguard REIT ETF 0.12% -0.09% -0.05% -0.19% 20.00% / 39.60% Low 94.971853
FRI First Trust S&P REIT Index Fund 0.49% -0.54% -0.47% -0.70% 20.00% / 39.60% Low 86.447814
WREI Wilshire US REIT ETF 0.32% -0.44% -0.33% -0.64% 20.00% / 39.60% High 82.569781
XLRE Real Estate Select Sector SPDR Fund 0.14% -- -- -- 20.00% / 39.60% Low 0
ICF iShares Cohen & Steers REIT ETF 0.35% -0.37% -0.31% -0.52% 20.00% / 39.60% Low 90.656103
RORE Hartford Multifactor REIT ETF 0.45% -- -- -- 20.00% / 39.60% High 0
IYR iShares U.S. Real Estate ETF 0.44% -0.54% -0.42% -0.70% 20.00% / 39.60% Low 87.670153
USRT iShares Core U.S. REIT ETF 0.08% -0.41% -0.18% -0.56% 20.00% / 39.60% Low 93.579796
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 06/27/17)

All Funds (18)

99
98.9575
98
98.337886
98
97.648171
98
97.590841
97
97.118851
97
96.618369
96
95.612046
91
90.927254
80
79.881773
77
77.010157
70
70.333185
64
63.51908
56
55.756925
47
47.236753
N/A
0
N/A
0
N/A
0
72
72.240478731033

ETF.com Grade as 06/22/17

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
SCHH Schwab U.S. REIT ETF $17.2 M 0.04% 8.34 100.00% 0.06% 0.01% None 98.337886
VNQ Vanguard REIT ETF $336.42 M 0.01% 40.48 100.00% 0.19% 0.00% None 97.590841
WREI Wilshire US REIT ETF $35.74 K 0.76% 0.01 100.00% 0.07% 0.02% None 47.236753
XLRE Real Estate Select Sector SPDR Fund $53.56 M 0.03% 33.14 100.00% 0.05% 0.03% None 0
RORE Hartford Multifactor REIT ETF $18.4 K 0.37% 0.01 100.00% 0.33% 0.03% None 0
EWRE Guggenheim S&P 500 Equal Weight Real Estate ETF $84.56 K 0.19% 0.06 100.00% 0.05% 0.04% None 0
USRT iShares Core U.S. REIT ETF $387.09 K 0.33% 0.16 100.00% 0.06% 0.01% None 70.333185
FREL Fidelity MSCI Real Estate Index ETF $1.77 M 0.14% 1.48 100.00% 0.02% 0.03% None 95.612046
NURE NuShares Short-Term REIT ETF $5.51 K 0.42% 0.00 100.00% 0.13% 0.04% None 55.756925
FRI First Trust S&P REIT Index Fund $1.23 M 0.06% 1.05 100.00% 0.03% 0.04% None 97.648171
ICF iShares Cohen & Steers REIT ETF $19.86 M 0.04% 3.97 100.00% 0.20% 0.00% None 96.618369
IYR iShares U.S. Real Estate ETF $476.88 M 0.01% 117.82 100.00% 0.07% 0.01% None 98.9575
KBWY PowerShares KBW Premium Yield Equity REIT Portfolio $2.23 M 0.15% 1.21 100.00% 1.26% 0.03% None 79.881773
PSR PowerShares Active US Real Estate Fund $55.56 K 0.21% 0.01 100.00% 0.15% 0.01% None 63.51908
REZ iShares Residential Real Estate Capped ETF $1.5 M 0.13% 0.47 100.00% 0.22% 0.01% None 90.927254
ROOF IQ US Real Estate Small Cap ETF $511.62 K 0.19% 0.38 100.00% 0.24% 0.04% None 77.010157
RWR SPDR Dow Jones REIT ETF $14.35 M 0.05% 3.16 100.00% 0.14% 0.02% None 97.118851
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 06/27/17)

All Funds (18)

96
96.082979
95
94.510567
92
92.053181
90
90.265133
89
89.382989
89
88.828403
88
88.317479
88
88.239013
88
88.062974
84
84.358645
73
73.065487
66
66.328314
59
58.830985
45
44.595304
N/A
0
N/A
0
N/A
0
84
84.031709760219

ETF.com Grade as 06/22/17

Equity: U.S. Real Estate