Best Real Estate ETFs by Performance

Real estate is one of the most popular asset classes among investors due to its ability to generate passive income and provide long-term capital appreciation. However, owning physical real estate properties can be challenging, time-consuming, and expensive. This is where investing in real estate with ETFs comes in.  

Learn the benefits of investing in real estate with ETFs, as well as the best real estate ETFs, as measured by three-month trailing returns through February 24, 2023. 

Why Invest in Real Estate With ETFs? 

Investing in a real estate investment trust (REIT) can be a smart way to invest in real estate without having to buy physical property. Real estate ETFs provide investors a means of gaining exposure to a diverse range of REITs in one convenient package. The largest REIT ETF is the Vanguard Real Estate ETF (VNQ), with $35.28 billion in assets. 

The potential benefits of investing in real estate ETFs include: 

1. Diversification 
2. Low fees  
3. Liquidity 
4. Lower risk 
5. Growth potential  
6. Income generation 

Diversification 

Investing in real estate with ETFs can help to diversify a portfolio and is more diversified than holding single REITs. Real estate ETFs invest in various real estate sub-sectors, such as residential, commercial, industrial or health care. This diversification spreads the risk across different types of properties, reducing the impact of any single property's performance on the overall investment. 

Low Fees 

Real estate ETFs have lower fees than traditional real estate investments, such as buying a physical property or investing in a REIT. ETFs' lower fees make them more accessible to investors with smaller budgets or those who prefer to invest in real estate without the hassle of property management. 

Liquidity 

Investing in physical real estate properties can be illiquid, meaning that it can take a long time to sell the property and convert it into cash. In contrast, real estate ETFs are highly liquid, allowing investors to buy and sell shares quickly and easily. 

Lower Risk 

Investing in real estate ETFs is less risky than investing in physical real estate properties. Real estate ETFs invest in a diversified portfolio of properties, which spreads the risk across different properties and markets. Additionally, real estate ETFs are regulated, providing investors with transparency and protection against fraudulent activities. 

Growth Potential 

Real estate ETFs provide investors with exposure to the real estate market's growth potential without the need to purchase physical properties. Real estate ETFs can also invest in global markets, providing investors with exposure to international real estate markets and potential growth opportunities. 

Income Generation 

Real estate ETFs can provide investors with a steady stream of income through dividends. Real estate ETFs invest in properties that generate rental income, which is then distributed to investors as dividends. This provides investors with passive income without the need for property management or other responsibilities associated with owning physical real estate properties. 

Investors should keep in mind that, like other investment securities, REIT ETFs can expose investors to multiple risks, including principal risk and interest rate risk. 

Best Real Estate ETFs by Performance 

To arrive at our list of best real estate ETFs by performance, we started with our own real estate ETF channel, which includes the entire universe of more than 50 U.S.-listed real estate ETFs. We then sorted by three-month trailing returns. For deeper reference, we include each fund’s AUM and expense ratio.  

The 10 best real estate ETFs, as measured by three-month returns, are: 

JPMorgan Realty Income ETF 

The JPMorgan Realty Income ETF (JPRE) is an actively managed ETF that invests in real estate investment trusts, primarily equity REITs and mortgage REITs, from any market capitalization. JPRE seeks REITs perceived to exhibit financial strength, operating revenues and attractive growth potential.  

• Three-month return: 5.45% 
• Assets under management: $519.81M 
• Expense ratio: 0.50% 
• As of date: February 24, 2023 

Pacer Industrial Real Estate ETF 

The Pacer Industrial Real Estate ETF (INDS) tracks an index of developed market companies that derive at least 85% of their revenue from industrial real estate activities. This includes industrial services such as warehouses and distribution centers, as well as self-storage facilities. 

• Three-month return: 5.36% 
• Assets under management: $221.70M 
• Expense ratio: 0.55% 
• As of date: February 24, 2023 

Global X SuperDividend REIT ETF 

The Global X SuperDividend REIT ETF (SRET) tracks an equal-weighted index of global REITs, choosing 30 high-yield, low-volatility companies. SRET distributes dividends to investors on a monthly basis. 

• Three-month return: 4.01% 
• Assets under management: $297.61M 
• Expense ratio: 0.58% 
• As of date: February 24, 2023 

Nuveen Short-Term REIT ETF 

The Nuveen Short-Term REIT ETF (NURE) tracks an index composed of U.S. REITs that typically have shorter-term lease durations than average. Specifically, the fund selects REITs that hold apartment buildings, hotels, self-storage facilities and manufactured homes. 

• Three-month return: 3.90% 
• Assets under management: $62.52M 
• Expense ratio: 0.35% 
• As of date: February 24, 2023 

Residential REIT Income ETF 

The Residential REIT Income ETF (HAUS) is an actively managed ETF investing in publicly traded REITs that derive a substantial amount of their revenue from U.S. residential properties. HAUS targets residential REITs that derive at least 75% of their revenue in multi-family or single-family rental housing, or at least 50% in senior housing. 

• Three-month return: 3.42% 
• Assets under management: $4.09M 
• Expense ratio: 0.60% 
• As of date: February 24, 2023 

iShares Residential and Multisector Real Estate ETF 

The iShares Residential and Multisector Real Estate ETF (REZ) tracks a market-cap-weighted index of U.S. residential, health care and specialized REITs. Unlike the ticker would indicate, REZ is a multisector real estate fund, which invests in a broad spectrum of U.S. REIT securities. 

• Three-month return: 3.30% 
• Assets under management: $682.85M 
• Expense ratio: 0.48% 
• As of date: February 24, 2023 

Janus Henderson U.S. Real Estate ETF 

The Janus Henderson U.S. Real Estate ETF (JRE) is an actively managed fund of real estate and real- estate-related companies in the U.S. The fund provides exposure through common stocks, preferred stocks and other equity securities like REITs and REIT-like entities, such as real estate operating companies. 

• Three-month return: 2.86% 
• Assets under management: $5.80M 
• Expense ratio: 0.65% 
• As of date: February 24, 2023 

Global X MSCI China Real Estate ETF 

The Global X MSCI China Real Estate ETF (CHIR) tracks a market-cap-weighted index of Chinese large and mid-cap companies in the real estate sector. CHIR offers straightforward exposure to Chinese real estate firms. It doesn’t try to pick winners, opting instead for no-nonsense exposure to the sector. 

• Three-month return: 2.67% 
• Assets under management: $6.67M 
• Expense ratio: 0.66% 
• As of date: February 24, 2023 

Cambria Global Real Estate ETF 

The Cambria Global Real Estate ETF (BLDG) is an actively managed ETF that provides exposure to the real estate sector and its related industries with a global basket of real estate securities including REITs and real estate management and development firms. The portfolio allocates 40% of its assets in equities listed outside of the U.S. and targets a total of 50-100 securities with equal weightings. 

• Three-month return: 2.61% 
• Assets under management: $26.71M 
• Expense ratio: 0.59% 
• As of date: February 24, 2023 

Xtrackers International Real Estate ETF 

The Xtrackers International Real Estate ETF (HAUZ) tracks a market-cap-weighted index of global real estate stocks, excluding the U.S., Pakistan and Vietnam. The fund includes all market cap sizes and allows for REITs to be among its constituents. 

• Three-month return: 2.51% 
• Assets under management: $564.36M 
• Expense ratio: 0.10% 
• As of date: February 24, 2023 

Bottom Line 

Investing in real estate with ETFs can provide investors with diversification, lower fees, liquidity, lower risk, growth potential and income generation. Therefore, real estate ETFs can be a smart choice for investors looking to gain exposure to the real estate market without the hassle and expenses of owning physical properties.  

As with any investment, investors should understand the risks involved before investing in real estate ETFs.