Best REIT ETFs: Top Real Estate Funds For Investors Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Our articles, interactive tools, and hypothetical examples contain information to help you conduct research but are not intended to serve as investment advice, and we cannot guarantee that this information is applicable or accurate to your personal circumstances. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Editorial disclosure
All reviews are prepared by our staff. Opinions expressed are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including any rates, terms and fees associated with financial products, presented in the review is accurate as of the date of publication. SHARE: by ah_fotobox - Andreas*H/Getty Images June 25, 2021 Gio Moreano is a contributing writer, covering investment topics that help you make smart money decisions. Formerly an investing journalist and lead analyst for CNBC, he is passionate about financial education and empowering people to reach their goals. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our investing reporters and editors focus on the points consumers care about most — how to get started, the best brokers, types of investment accounts, how to choose investments and more — so you can feel confident when investing your money. Investing disclosure: The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. By owning REITs, investors earn a portion of the profits without buying, managing or financing a physical property. Additionally, for its diversification characteristics as these investments have low correlations to stocks or bonds. REIT investors carefully consider dividend yields, as dividends are the primary motivation for investing in these assets. Dividend yields appear as a percentage, and are calculated by taking the annual dividend payment and dividing it by the share price. In general, the type of assets a REIT ETF owns will determine the fund’s risk profile and the dividend payout. Before investing in a REIT ETF, consider reviewing the fund’s to understand its investment strategy and the holdings it owns. Top REIT ETFs
Below are some of the most popular REIT ETFs on the market. (Data as of June 15, 2021) Vanguard Real Estate ETF VNQ
VNQ is the most popular REIT ETF. The fund tracks an index of companies involved in the ownership and operation of real estate properties across the United States. Fund issuer: Vanguard Five-year annual return: 8.6 percent Dividend yield: 3.21 percent Expense ratio: 0.12 percent Assets under management: ~$42 billion iShares U S Real Estate ETF IYR
IYR is one of the oldest REIT ETFs in existence. Similar to VNQ, the fund tracks an index of U.S. companies directly or indirectly involved in the real estate space. Fund issuer: BlackRock Five-year annual return: 9 percent Dividend yield: 2.49 percent Expense ratio: 0.42 percent Assets under management: ~$7 billion Real Estate Select Sector SPDR Fund XLRE
XLRE represents one of the core sectors that make up the S&P 500 index. The fund invests in large-cap real-estate companies with operations in the United States. Fund issuer: State Street Global Advisors Five-year annual return: 11 percent Dividend yield: 3.39 percent Expense ratio: 0.12 percent Assets under management: ~$3 billion iShares Global REIT ETF REET
REET tracks a global index of real-estate companies operating in and developed markets, including the United States. Fund issuer: BlackRock Five-year annual return: 6 percent Dividend yield: 2.28 percent Expense ratio: 0.14 percent Assets under management: ~$3 billion JPMorgan BetaBuilders MSCI U S REIT ETF BBRE
BBRE tracks an index of small-, mid- and large-cap companies, mainly in commercial and specialized real estate across the United States. Fund issuer: JPM Five-year annual return: N/A (The fund launched in 2018) Dividend yield: 3.95 percent Expense ratio: 0.11 percent Assets under management: ~$1.5 billion What are REITs
REITs invest in a range of real estate properties such as residential apartments, office buildings, hospitals, data centers, hotels, retail stores and so on. The companies that support these activities, such as financial lenders and management companies, are also part of the group. Some REITs specialize in specific market areas like mortgage financing, while others have diversified investments across the real estate market. The risk profile of the REIT depends on the assets it holds. To qualify as a REIT, a company must follow . One of these provisions is that the company must distribute to shareholders a minimum of 90 percent of its taxable income in dividends. Most REITs fall into three categories: equity, mortgage and hybrid. Benefits and disadvantages of investing in REIT ETFs
REIT ETFs provide a reliable stream of for dividend investors without the hassle of owning or managing a property. In addition, these funds are highly liquid, so you can get back your principal at any time — something that’s not easily achieved through physical real estate. Also, REITs serve as a diversification tool in your portfolio, as they are less correlated to other asset classes like stocks. On the flip side, REITs tend to be more volatile and are susceptible to quick losses, a characteristic that is less noticeable in physical real estate. In addition, since REITs must return 90 percent of income to investors, they have fewer funds available to act on other investment opportunities. Also, dividends from REITs are often taxed as regular income. Despite these drawbacks, , a REIT organization, shows that REITs’ total return over the past 20 years has outperformed the performance of the Russell 1,000 large-cap index by 2 percent (10.7 percent versus 8.7 percent). How to invest in REIT ETFs
is an essential component of every investor’s portfolio. And when dividends are reinvested, the returns can be even higher. When choosing REIT ETFs, here are four steps to consider: 1 Determine your financial goals
The type of investments you choose depends on what you are trying to achieve. For example, someone about to retire should have a more conservative approach to investing. So always let your financial objectives drive your decision-making. 2 Research REIT funds
When selecting REIT ETFs, pay attention to factors like dividend history, dividend yield, the fund’s performance, expense ratios, top holdings and assets under management. Investors can find this information in a fund’s prospectus. 3 Outline your asset mix
Before investing, do an inventory of what you own and how you want to allocate your assets. Remember, the key is to . 4 Know what you own
By periodically reviewing your investments, you can take charge of your finances and make any adjustments needed. Leverage any free resources from your broker, like meeting with a financial planner, and always ask questions. Ultimately, there’s no such thing as a hands-off investment. Like any other investment, REIT ETFs are susceptible to losses. However, the magnitude of potential losses is tied to the level of risk contained in the portfolio. So a fund that invests heavily in potentially riskier assets like highly-leveraged real estate companies will have a very different risk profile than a fund that invests in established, tried-and-true names. Learn more
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation. SHARE: Gio Moreano is a contributing writer, covering investment topics that help you make smart money decisions. Formerly an investing journalist and lead analyst for CNBC, he is passionate about financial education and empowering people to reach their goals. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles