2011 stock picks: REIT ETF’s � Intelligent Speculator
So you have been building up a passive income portfolio and are at a point where you want to add more diversification to what you have? REIT’s would certainly be a great addition but they are often difficult to choose from without spending a lot of time and while some of us want to spend the time to choose the best ones, many others want an easier solution. Of course, that is where ETF’s come in.We wrote about REIT ETF’s briefly last year and received a lot of positive feedback because of the lack of information about the options.
REIT ETF’s are not new but they are certainly gaining steam and right now,Vanguard’s VNQ looks like a very solid winner. It has a very low 0.13% annual fee which is by far the best you will find in the sector and pays a very reasonable 3.42% dividend yield. And things are changing fast. Last year, VNQ was the category leader but had less than $5 billion in assets under management. These days, VNQ counts on over $15 billion and has distanced itself from rivals. It has investments in 104 US REIT’s although over 40% of those assets are invested into their top 10 holdings.
Real Estate Outlook
There remains some degree of risk involved in the real estate market as many investors continue to worry about a double dip in prices and REIT ETF’s are certainly not for everyone. If you do not have much assets besides your house, you might already have a big enough exposure to the real estate market (although you would admit that exposure is not very diversified) but as your portfolio grows, gaining more exposure is probably a good thing as it will make your passive income portfolio more solid, steady and reliable in the long term.
My first recommendation would be to take a look at the 20 things that I consider when selecting ETF’s, but if you want to cut straight to the case, I would consider the two main choices here to be VNQ and RWX (an internationally diversified real estate ETF), but here are most of the options that you have:
| Ticker | Name | Market Cap | Price | Fees | 1Y Return | Dividend Yield |
|---|---|---|---|---|---|---|
| VNQ | Vanguard REIT ETF | $7,487,048,000.00 | $55.37 | 0.12 | 26.417 | 3.42 |
| IYR | iShares Dow Jones US Real Estate Index Fund | $3,083,396,000.00 | $55.96 | 0.47 | 24.275 | 3.52 |
| RWR | SPDR Dow Jones REIT ETF | $1,368,794,000.00 | $61.02 | 0.25 | 25.91 | 2.94 |
| RWX | SPDR Dow Jones International Real Estate ETF | $1,437,894,000.00 | $38.93 | 0.6 | 21.429 | 8.69 |
| URE | ProShares Ultra Real Estate | $536,793,300.00 | $50.62 | 0.95 | 42.814 | 0.77 |
| SRS | ProShares UltraShort Real Estate | $241,879,900.00 | $18.14 | 0.95 | -49.889 | 0 |
| IFGL | iShares FTSE EPRA/NAREIT Developed Real Estate ex-US Index Fund | $378,322,000.00 | $31.01 | 0.48 | 15.533 | 6.24 |
| DRN | Direxion Daily Real Estate Bull 3x Shares | $178,983,000.00 | $56.82 | 0.96 | 55.568 | 1.88 |
| RWO | SPDR Dow Jones Global Real Estate ETF | $163,108,000.00 | $37.07 | 0.51 | 23.672 | 7.08 |
| DRW | WisdomTree International Real Estate Fund | $118,814,500.00 | $28.63 | 0.58 | 17.51 | 9.29 |
| DRV | Direxion Daily Real Estate Bear 3x Shares | $55,288,740.00 | $18.01 | 0.95 | -70.396 | 0 |
| FRI | First Trust S&P REIT Index Fund | $71,052,530.00 | $14.65 | 0.5 | 25.456 | 2.04 |
| REM | iShares FTSE NAREIT Mortgage Plus Capped Index Fund | $102,114,500.00 | $15.59 | 0.48 | 16.817 | 9.1 |
| TAO | Guggenheim China Real Estate ETF | $65,004,400.00 | $19.94 | 0.65 | 11.714 | 0.77 |
| REZ | iShares FTSE NAREIT Residential Plus Capped Index Fund | $70,902,000.00 | $39.39 | 0.48 | 30.302 | 3.03 |
| FTY | iShares FTSE NAREIT Real Estate 50 Index Fund | $50,580,000.00 | $33.72 | 0.48 | 24.455 | 3.56 |
| FFR | First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund | $56,032,070.00 | $35.02 | 0.6 | 18.518 | 3.87 |
| IFAS | iShares FTSE EPRA/NAREIT Developed Asia Index Fund | $25,488,000.00 | $31.86 | 0.48 | 17.218 | 5.99 |
| PSR | PowerShares Active U.S. Real Estate Fund | $16,033,500.00 | $45.81 | 0.8 | 25.703 | 2.11 |
| RTL | iShares FTSE NAREIT Retail Capped Index Fund | $14,065,000.00 | $28.13 | 0.48 | 35.17 | 2.91 |
| FIO | iShares FTSE NAREIT Industrial/Office Capped Index Fund | $9,327,499.00 | $26.65 | 0.48 | 13.856 | 3.22 |
| IFEU | iShares FTSE EPRA/NAREIT Developed Europe Index Fund | $8,989,500.00 | $29.97 | 0.48 | 8.649 | 4.09 |
| IFNA | iShares FTSE EPRA/NAREIT North America Index Fund | $10,000,000.00 | $40.00 | 0.48 | 23.943 | 2.73 |
| REK | ProShares Short Real Estate | $19,945,040.00 | $39.89 | 0.95 | N/A | 0 |
| WREI | Wilshire US REIT ETF | $9,100,620.00 | $30.34 | 0.32 | N/A | 0 |
| VNQI | Vanguard Global ex-U.S. Real Estate ETF | $65,847,700.00 | $50.60 | 0.35 | N/A | 0.88 |
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