Best REIT ETFs to Watch in 2025

Below, we’ll examine a selection of popular and well-regarded REIT ETFs, highlighting their key characteristics to help you make informed investment decisions. We will consider factors such as expense ratios, top holdings, and reasons to consider each ETF.

• Expense Ratio: 0.12%
• Top Holdings: Prologis Inc., American Tower Corp., Equinix Inc.
• Why Consider It? VNQ offers broad exposure to the U.S. real estate market, including a diverse range of REITs across various property sectors. Its low expense ratio and high liquidity make it a favorite among both seasoned and novice investors. It’s a solid choice for investors seeking a well-diversified REIT portfolio with minimal costs.

• Expense Ratio: 0.41%
• Top Holdings: Prologis Inc., American Tower Corp., Simon Property Group
• Why Consider It? IYR provides comprehensive coverage of U.S. real estate companies and REITs. While its expense ratio is higher than some of its competitors, IYR’s long-standing history and robust trading volume offer stability and accessibility for investors looking to participate in the broader real estate market.

• Expense Ratio: 0.07%
• Top Holdings: Prologis Inc., American Tower Corp., Equinix Inc.
• Why Consider It? SCHH is known for its incredibly low expense ratio, making it one of the most cost-effective options for investing in REITs. This ETF tracks a market-cap-weighted index of U.S. REITs and is suitable for investors seeking broad market exposure at a very low cost.

• Expense Ratio: 0.25%
• Top Holdings: Prologis Inc., American Tower Corp., Simon Property Group.
• Why Consider It? RWR tracks the Dow Jones Equity All REIT Index, providing exposure to a wide range of REITs. It offers a solid balance of diversification and cost, making it a reasonable choice for investors looking for a traditional REIT ETF.

• Expense Ratio: 0.12%
• Top Holdings: Prologis Inc., American Tower Corp., Equinix Inc.
• Why Consider It? XLRE focuses exclusively on real estate companies within the S&P 500. This ETF is ideal for investors who want targeted exposure to the largest and most established REITs in the U.S. market and seek sector-specific exposure within their broader investment strategy.

Discover the capabilities of InvestingPro for evaluating REIT ETFs. Access in-depth analysis of REIT ETFs, easily compare expense ratios, 1-year, and 5-year returns. InvestingPro can provide the tools needed to compare and contrast various REIT ETFs to help you decide which option would be best for your individual situation:

• Diversification: REIT ETFs offer instant diversification across numerous real estate holdings, reducing the risk compared to investing in individual properties or REITs.
• Liquidity: REIT ETFs are highly liquid, meaning you can buy or sell shares easily on the stock market.
• Income Generation: REITs are known for their high dividend yields, and REIT ETFs pass these dividends on to investors, providing a steady income stream.
• Accessibility: Investing in REIT ETFs allows you to access the real estate market with a relatively small amount of capital.

Here are a few points to consider if REIT ETFs are a good investment for you:

• Diversification: REIT ETFs offer instant diversification across numerous real estate holdings, reducing the risk compared to investing in individual properties or REITs.
• Income Generation: REITs are known for their high dividend yields, and REIT ETFs pass these dividends on to investors, providing a steady income stream.
• Liquidity: REIT ETFs are highly liquid, meaning you can buy or sell shares easily on the stock market.
• Accessibility: Investing in REIT ETFs allows you to access the real estate market with a relatively small amount of capital.

• Interest Rate Sensitivity: REITs are sensitive to interest rate changes. Rising interest rates can increase borrowing costs for REITs and potentially decrease their profitability.
• Market Volatility: Like all investments, REIT ETFs are subject to market volatility and economic cycles. A downturn in the real estate market can negatively impact the performance of REIT ETFs.
• Expense Ratios: While some REIT ETFs have low expense ratios, others can be more costly. These fees can erode your returns over time.

Choosing the right REIT ETF requires careful analysis and consideration of several factors. Here are some essential steps to help you find the top REIT ETFs for your investment needs:

• Understanding what the ETF invests in is key. Different ETFs focus on different segments of the REIT market. Do you prefer residential, commercial, or specialized REITs like data centers or cell towers? Review the ETF’s top holdings to ensure they align with your investment goals. Resources like ETF websites and financial news platforms provide detailed lists of holdings. Use InvestingPro to gain insights into sector allocation, top holdings, and diversification metrics.

• Lower expense ratios mean more of your money stays invested. Compare costs across different REIT ETFs, balancing fees with fund performance. Use InvestingPro to easily assess and compare expense ratios.

• Historical performance isn’t a guarantee of future returns, but it provides insights into how the ETF reacts to market conditions. Ensure the ETF has sufficient trading volume for easy buying and selling. Within InvestingPro you can find and compare performance across ETF benchmarks.

• REIT ETFs can be very broad based or specifically targeted towards certain subsets of the REIT marketplace. Understanding the focus and objective of the fund is helpful in determining if this fund is a good investment for your individual situation.

A REIT ETF (Real Estate Investment Trust Exchange-Traded Fund) is an investment fund that holds a portfolio of REITs, offering investors a diversified way to invest in the real estate market.

REIT ETFs can be a good investment for investors seeking diversification, income, and exposure to the real estate market without directly owning properties. However, they are subject to market risks, interest rate sensitivity, and expense ratios.

The main risks include interest rate sensitivity, market volatility, and expense ratios. Rising interest rates can negatively impact REITs, and market downturns can affect the performance of REIT ETFs.

Consider factors like expense ratio, investment focus, historical performance, and trading volume. Analyze the ETF’s holdings and ensure they align with your investment goals and risk tolerance.

Financial websites, ETF provider websites, and investment research platforms like InvestingPro offer comprehensive data and analysis on REIT ETFs. Consulting with a financial advisor is also recommended.