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Real estate: The best REIT ETFs in 2019

Real Estate Investment Trusts, or REITs for short, are a great way to invest in real estate for a variety of reasons. They give shareholders a share of ownership of a property or real estate portfolio and guarantee that a certain percentage of the profits will be paid out as dividends. A REIT ETF is a type of fund that consists entirely of REIT stocks.

If you want to invest in real estate but can't afford to invest directly in real estate or build a diverse portfolio of REITs, a REIT ETF might be the right place to start. REIT ETFs allow you to invest in a wide variety of real estate with a low cost investment - ETFs, like stocks, can be bought and sold on the stock market, and just like stocks, the companies that create and manage ETFs must make information available to the public Help you decide if it's a good investment. Before investing anywhere, it is important to understand the underlying assets, who is managing the fund and what fees you pay as a shareholder. Read on to consider a few important things to consider when choosing a REIT ETF.

Understand the stocks. An ETF is a fund that owns many investments on behalf of a group of investors. REIT ETFs hold REITs and REIT stocks. Many ETFs buy REITs in the form of a share that qualifies for a REIT.

Research the manager. Many companies set up mutual funds and ETFs. You can buy REITs that are managed by reputable, well-known investment firms that are household names, and some from more obscure companies that you need to do a little more research on before investing.

Look at the fees. ETFs tend to have relatively low management fees compared to mutual funds, but that's not always the case. Take a look at the fees charged by each fund and compare them to similar funds to make sure you're getting a good deal.

Remember that all investments come with some degree of risk. REITs and REIT ETFs are heavily influenced by the same forces that shape the real estate markets. These include interest rates, employment rates, and other economic factors. As with any investment, understand the risks, expected returns, and how your money will be managed before you hand it over.

With those criteria (and caveats) in mind, here is a list of the best REIT ETFs to consider for your investment portfolio.

List of some real estate ETFs by performance [5 years]

ETFs for the Real Estate Sector - ETF Tracking Differences

Source: Tracking Differences

Interestingly, US real estate stocks did the best. As in other sectors, the US tends to dominate the markets and dictate growth.

iShares Developed Markets Property Yield UCITS ETF USD (Dist)

This REIT-ETF has been a real depository favorite over the past few years. Not only the price performance was impressive at almost 60% in the last 5 years: the dividend yield of 4-5% is also full. With a TER of 0.59%, the fund is relatively expensive on paper, but in practice it only deviated 0.23% from its reference index between 2008 and 2019, making it significantly cheaper. More information about this ETF can be found in the video by Christian W. Röhl.

ISIN: IE00B1FZS350 WKN: A0LEW8

iShares Global REIT

If you want to carry your real estate investment funds around the world, the iShares Global REIT from Blackrock is a solid fund. This ETF has tended to outperform the benchmark FTSE EPRA / NAREIT Global REIT Index in the (less than) five years since the fund was launched.

The iShares Global REIT ETF has a competitive management fee of 0.14%. Key holdings include Simon Property Group, Prologis, Public Storage, and Avalon Bay Communities.

65% of this fund is invested in the United States, 7% in Japan, 6% in Australia, 5% in the UK and the remainder in France, Canada, Singapore, Hong Kong and South Africa, with 3% "other countries" of total assets. These are generally developed, strong economies with stable real estate markets.

Fidelity MSCI Real Estate Index ETF

Fidelity is another major ETF provider with a focus on US real estate and is one of the lowest management fees anywhere. You pay a modest 0.084% expense ratio for this fund, which tracks the MSCI USA IMI Real Estate Index.

Major holdings in this fund include American Tower Corp, Simon Property Group, Crown Castle International, Equinix and Prologis. Simon Property Group appears in most REIT ETFs, which include the US, as Simon Property Group is the largest retail REIT and shopping center operator in the US.

05 Best Mortgage Focus: iShares Mortgage Real Estate ETF (REM) ‌‌iShares‌‌Courtesy of iShares

This Blackrock ETF includes exposure to US residential and commercial mortgages. The aim is to include domestic real estate investments including REITs, real estate stocks and direct real estate investments.

This ETF is compared to the FTSE NAREIT All Mortgage Capped Index and has underperformed the index since its inception. It was busy as the fund's launch date was May 2007.

The fund charges 0.48% management fees. Key holdings include Annaly Capital Management REIT, AGNC Investment REIT, New Residential Investment REIT and Starwood Property Trust REIT.

Vanguard Real Estate ETF

Vanguard is the largest mutual fund company in the world and continues to raise funds quickly. Vanguard Real Estate ETFs trade under the ticker VNQ and are widely recognized as one of the best real estate ETFs available today.

With an expense ratio of just 0.12%, Vanguard claims its fee is 90% lower than the average real estate ETF. This REIT follows the MSCI US Investable Market Real Estate 25/50 Index. It's considered a bit riskier than average, but not one of the riskiest classes of ETFs.

Like most real estate funds, this fund was hit by the real estate crash of 2007-2008, but has been offering stable and increasing returns ever since. This is a great way to transfer real estate to a retirement account or other long-term investment account. Key holdings include the Vanguard Real Estate II Index Fund, American Tower Corp, and the Simon Property Group.

Conclusion

Real estate investment trusts, or REITs, are a great way to invest in real estate for a number of reasons. They give shareholders a stake in a property or real estate portfolio and guarantee that a certain percentage of profits will be paid out in the form of dividends. A REIT ETF is a type of fund that consists exclusively of REIT shares.

If you want to invest in real estate, but cannot afford either directly in real estate or to build up a diverse REIT portfolio, a REIT ETF can be the right place to start. REIT ETFs allow you to invest in a wide variety of real estate with a single low-cost investment - ETFs can be bought and sold on the stock market like stocks, and just like stocks, the companies that create and manage ETFs must make information available to the public to help you decide if it's a good investment. Before investing anywhere, it is important to understand the underlying assets, who is managing the fund and what fees you will be paying as a shareholder. Read on for some important things to consider when choosing a REIT ETF.

Understand the stocks. An ETF is a fund that owns many investments on behalf of a group of investors. REIT ETFs hold REITs and REIT stocks. Many ETFs buy REITs in the form of a share that qualifies for REIT classification.

Research the manager. Many companies set up mutual funds and ETFs. You can buy REITs that are managed by reputable, well-known investment firms that are a household name, and some from more obscure companies that you need to do a little more research on before investing.

Look at the fees. ETFs tend to charge relatively low investment management fees compared to mutual funds, but that's not always the case. Take a look at each fund's fees and compare them to similar funds to make sure you're getting a good deal.

Remember that all investments involve some degree of risk. REITs and REIT ETFs are heavily influenced by the same forces that shape real estate markets. These include interest rates, employment rates, and other economic factors. As with any investment, you should understand the risks, expected returns, and how your money will be managed before handing it over.

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