Top REIT ETFs Show Similarities, Differences

June 12, 2017

3.  Schwab U.S. REIT ETF (SCHH)

The newest fund on the block, SCHH, launched in 2011 and has AUM of $3.32 billion. As of May 31, it is down 1.26% year-to-date. Its five-year track record is up 9.67%. Its expense ratio of 0.07% makes it the leader in low-cost REIT ETFs.

It follows the Dow Jones U.S. Select REIT Index, which is slightly different than the Dow Jones U.S. Real Estate Index. The Select REIT Index is a market-capped index that represents U.S. REITs as well as real estate operating companies, but eschews mortgage-backed REITs. Also, the fund may invest up to 10% of its net assets in securities not included in its index. However, these investments are ones the investment advisor believes will help the fund track the index. Its weighted average market cap is $17.13 billion.

The fund has 105 stocks. Its price-to-earnings ratio is 37.06, with price-to-book at 2.42. Its biggest sector holding is retail REITs, at 21.1%, with residential at 20.1% and office at 16.6%. SCHH’s top three holdings are Simon Property Group, Public Storage and warehouse REIT Prologis. The three top holdings make up 17.3% of assets.

4. SPDR Dow Jones REIT ETF (RWR)

RWR is another longtime U.S. REIT ETF, having been launched in 2001. It has an expense ratio of 0.25%, and as of May 31, it has $3.05 billion in AUM. It’s down 1.42% year-to-date, and the five-year average is 9.48%.

It follows the same index as SCHH, the Dow Jones U.S. Select REIT Index, making it a market-cap-weighted fund. RWR has a weighted average market cap of $17.13 billion. The fund has 106 stocks, and its price-to-earnings ratio is 37.01, with price-to-book at 2.42.

Although it follows the same index as SCHH, RWR hews a little more closely to the index. Office REITs make up the top sector, at 26.63%, with residential at 21.17% and retail at 20.14%. Despite its differences with SCHH, RWR’s top three holdings—Simon Property group, Public Storage and Prologis—are roughly the same as SCHH, with their combined weight at 17.27%.

5. iShares Cohen & Steers REIT ETF (ICF)

This ETF is slightly different than the other large ETFs. Whereas the other ETFs have over 100 stocks and a mix of market-cap size, ICF’s 30 large-cap REITs are selected by committee to comprise the index. ICF debuted in 2001. As of May 31, it has an AUM of $3.23 billion and is up 1.10% year-to-date. Its five-year track record is up 9.74%. ICF’s expense ratio is 0.35%.

Given that it tracks large-cap stocks, it has the biggest weighted average market cap, at $22.5 billion. ICF’s price-to-earnings ratio is 36.37, with price-to-book at 2.88.

Like some of the other REITs, the sector breakdown shows retail REITs dominate the fund, at 20.09%, with specialized holdings close, at 20.01%, and residential at 19.07%. Its top three holdings are Simon Property Group, Equinix and Public Storage, equaling 21.59% of total holdings.

 

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