Equity: U.S. Real Estate

WREI Top Performer Intra-day
Price $46.85
Today’s Change +0.22%(0.47)
3:51pm 03/24/2017
USRT Bottom Performer Intra-day
Price $48.54
Today’s Change -0.66%(-1.34)
3:53pm 03/24/2017
  • 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 03/24/17)

All Funds (18)

IYR $4.49 B 4492333440 Liquid but expensive to hold

A 95
E
88
88
T
99
99
F
95
95

FREL $233.48 M 233482720 N/A

A 95
E
94
94
T
96
96
F
95
95

VNQ $34.04 B 34038578346.09 Liquid and cheap to hold

A 90
E
95
95
T
98
98
F
90
90

FRI $228.35 M 228350045.67 stable but not cheap to hold

A 89
E
87
87
T
98
98
F
89
89

RWR $3.12 B 3123348553.6518 Liquid

A 88
E
93
93
T
97
97
F
88
88

SCHH $2.95 B 2947234260 very low holding cost

A 88
E
97
97
T
99
99
F
88
88

ICF $3.29 B 3289367350 large and liquid

A 84
E
91
91
T
97
97
F
84
84

REZ $379.59 M 379586400 decent AUM and liquidity

B 70
E
86
86
T
94
94
F
70
70

KBWY $265.53 M 265526100 Dividend-focused

B 47
E
90
90
T
76
76
F
47
47

USRT $87.53 M 87526800 low fee

B 100
E
94
94
T
76
76
F
100
100

PSR $26.57 M 26568500 Dear to hold; hard to trade

C 93
E
74
74
T
62
62
F
93
93

WREI $23.13 M 23132500 low AUM; low trade volume

C 89
E
86
86
T
41
41
F
89
89

ROOF $99.8 M 99799400 pricey

C 66
E
80
80
T
77
77
F
66
66

RORE $4.45 M 4451190 N/A

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

EWRE $27.98 M 27982500 new; trade with care

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

NURE $6.33 M 6330450 N/A

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

XLRE $2.32 B 2319961364.5 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 03/16/17

Equity: U.S. Real Estate

Performance Dispersion
Performance  [as of 03/23/17] 1 Month 3 Month YTD 1 Year 3 Years 5 Years 10 Years
Benchmark: Thomson Reuters US Residential & Commercial REITs-1.78%3.60%2.08%8.91%10.35%9.33%--
A 95.328313IYR4492333440IYRiShares U.S. Real Estate ETF-1.71%3.57%2.08%7.54%9.29%9.13%3.21%
A 94.854937FREL233482720FRELFidelity MSCI Real Estate Index ETF-2.08%3.17%1.47%7.71%------
A 89.501165VNQ34038578346.09VNQVanguard REIT Index Fund-2.86%2.16%0.05%5.86%10.05%9.99%4.68%
A 88.977107FRI228350045.67FRIFirst Trust S&P REIT Index Fund-3.13%1.74%-0.29%4.99%9.44%9.40%--
A 88.157734RWR3123348553.6518RWRSPDR Dow Jones REIT ETF-2.96%1.17%-0.91%3.96%10.01%9.48%3.79%
A 88.139997SCHH2947234260SCHHSchwab U.S. REIT ETF-3.03%1.17%-0.90%4.00%10.12%9.62%--
A 83.865421ICF3289367350ICFiShares Cohen & Steers REIT ETF-2.17%2.59%0.57%3.39%10.99%9.46%3.24%
B 69.838034REZ379586400REZiShares Residential Real Estate Capped ETF-0.13%5.16%2.79%3.95%13.10%11.05%--
B 46.987375KBWY265526100KBWYPowerShares KBW Premium Yield Equity REIT Portfolio-4.22%0.46%-1.44%26.37%12.06%13.82%--
B 100USRT87526800USRTiShares Core U.S. REIT ETF-2.34%2.80%0.88%6.39%10.39%9.31%--
C 93.268836PSR26568500PSRPowerShares Active US Real Estate Fund-1.08%4.06%4.66%8.94%10.99%9.28%--
C 89.437753WREI23132500WREIWilshire US REIT ETF-3.35%0.90%-0.62%4.37%10.01%9.62%--
C 65.733125ROOF99799400ROOFIQ US Real Estate Small Cap ETF-3.52%-1.15%-2.57%15.91%7.16%12.23%--
N/A 0RORE4451190ROREHartford Multifactor REIT ETF-7.50%-1.19%0.61%--------
N/A 0EWRE27982500EWREGuggenheim S&P 500 Equal Weight Real Estate ETF-1.60%3.69%2.01%3.65%------
N/A 0NURE6330450NURENuShares Short-Term REIT ETF-1.35%0.34%1.22%--------
N/A 0XLRE2319961364.5XLREReal Estate Select Sector SPDR Fund-1.07%4.12%2.70%4.65%------
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 03/24/17)

All Funds (18)

97
97.064518
95
94.975938
94
93.783031
94
93.594776
93
92.892632
91
90.698588
90
90.201602
88
87.537673
87
87.47738
86
86.108442
86
85.553262
80
79.909951
74
73.6244
N/A
0
N/A
0
N/A
0
N/A
0
87
86.921127334685

ETF.com Grade as 03/16/17

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
ROOF IQ US Real Estate Small Cap ETF 0.70% -1.08% -0.68% -1.54% 20.00% / 39.60% Low 79.909951
RWR SPDR Dow Jones REIT ETF 0.25% -0.32% 0.82% -1.24% 20.00% / 39.60% Low 92.892632
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% -0.16% -0.08% -0.29% 20.00% / 39.60% Low 97.064518
FREL Fidelity MSCI Real Estate Index ETF 0.08% -0.20% -0.02% -0.31% 20.00% / 39.60% Low 93.783031
VNQ Vanguard REIT Index Fund 0.12% -0.13% -0.05% -0.19% 20.00% / 39.60% Low 94.975938
FRI First Trust S&P REIT Index Fund 0.48% -0.56% -0.49% -0.70% 20.00% / 39.60% Low 87.47738
WREI Wilshire US REIT ETF 0.32% -0.44% -0.26% -0.64% 20.00% / 39.60% Medium 86.108442
XLRE Real Estate Select Sector SPDR Fund 0.14% -- -- -- 20.00% / 39.60% Low 0
ICF iShares Cohen & Steers REIT ETF 0.35% -0.40% -0.32% -0.52% 20.00% / 39.60% Low 90.698588
RORE Hartford Multifactor REIT ETF 0.45% -- -- -- 20.00% / 39.60% Low 0
IYR iShares U.S. Real Estate ETF 0.44% -0.53% -0.42% -0.70% 20.00% / 39.60% Low 87.537673
USRT iShares Core U.S. REIT ETF 0.08% -0.41% -0.18% -0.56% 20.00% / 39.60% Low 93.594776
KBWY PowerShares KBW Premium Yield Equity REIT Portfolio 0.35% -0.35% -0.24% -0.61% 20.00% / 39.60% Low 90.201602
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 73.6244
REZ iShares Residential Real Estate Capped ETF 0.48% -0.16% 0.13% -0.34% 20.00% / 39.60% Low 85.553262
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 03/24/17)

All Funds (18)

99
98.951462
99
98.544333
98
97.70596
98
97.612245
97
97.180542
97
96.509912
96
95.583413
94
93.513343
77
76.551497
76
76.304322
76
75.925855
62
62.241097
41
40.770066
N/A
0
N/A
0
N/A
0
N/A
0
72
72.240478731033

ETF.com Grade as 03/16/17

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
FRI First Trust S&P REIT Index Fund $1.52 M 0.06% 1.31 100.00% 0.03% 0.04% None 97.70596
ICF iShares Cohen & Steers REIT ETF $20.47 M 0.05% 4.07 100.00% 0.20% 0.01% None 96.509912
IYR iShares U.S. Real Estate ETF $543.11 M 0.01% 139.35 100.00% 0.07% 0.01% None 98.951462
KBWY PowerShares KBW Premium Yield Equity REIT Portfolio $2.21 M 0.15% 1.16 100.00% 1.29% 0.03% None 76.304322
PSR PowerShares Active US Real Estate Fund $65.64 K 0.25% 0.02 100.00% 0.15% 0.01% None 62.241097
REZ iShares Residential Real Estate Capped ETF $1.78 M 0.08% 0.57 100.00% 0.21% 0.01% None 93.513343
ROOF IQ US Real Estate Small Cap ETF $581.12 K 0.19% 0.44 100.00% 0.25% 0.04% None 76.551497
RWR SPDR Dow Jones REIT ETF $24.34 M 0.04% 5.27 100.00% 0.13% 0.02% None 97.180542
SCHH Schwab U.S. REIT ETF $26.81 M 0.04% 13.26 100.00% 0.06% 0.01% None 98.544333
VNQ Vanguard REIT Index Fund $324.72 M 0.01% 38.74 100.00% 0.18% 0.00% None 97.612245
WREI Wilshire US REIT ETF $66.87 K 1.64% 0.03 100.00% 0.06% 0.02% None 40.770066
XLRE Real Estate Select Sector SPDR Fund $61.34 M 0.03% 38.58 100.00% 0.05% 0.03% None 0
RORE Hartford Multifactor REIT ETF $10.96 K 0.29% 0.01 100.00% 0.33% 0.03% None 0
EWRE Guggenheim S&P 500 Equal Weight Real Estate ETF $119.96 K 0.21% 0.09 100.00% 0.05% 0.04% None 0
USRT iShares Core U.S. REIT ETF $487.81 K 0.29% 0.20 100.00% 0.05% 0.01% None 75.925855
FREL Fidelity MSCI Real Estate Index ETF $2.8 M 0.12% 2.32 100.00% 0.02% 0.04% None 95.583413
NURE NuShares Short-Term REIT ETF $0 0.33% 0 100.00% 0.12% 0.04% 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

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
FREL
5
4
3
2
1
FRI
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
EWRE
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 03/24/17)

All Funds (18)

95
95.328313
95
94.854937
93
93.268836
90
89.501165
89
89.437753
89
88.977107
88
88.157734
88
88.139997
84
83.865421
70
69.838034
66
65.733125
47
46.987375
100
100
N/A
0
N/A
0
N/A
0
N/A
0
84
84.031709760219

ETF.com Grade as 03/16/17

Equity: U.S. Real Estate