ETFs in the real estate investment trust (REIT) sector have been steadily higher over the past few months. And, even as equity markets overall have seen uneven performance REIT-based ETFs have been making new highs. There are quite a few issues to choose from in the category including:
- iShares DJ U.S. Real Estate Sector ETF (IYR)
- Vanguard MSCI Real Estate ETF (VNQ)
- Schwab DJ U.S. Real Estate ETF (SCHH)
- Focus Shares Morningstar Real Estate ETF (FRLL)
Most of the latter issues are newer entries but performance and index weightings vary only slightly one to another. Fees are a different matter as lower fees are the hallmark of the latest entries. This can be a significant factor in producing higher yields given the lower fee.
Recent positive performance and spike in trading volume may be due to late contributions to retirement accounts from individuals beating the April deadline. It also continues a trend for retail investors seeking more dividend yield versus capital gains. However, REIT investors may see a portion of dividend income taxed as return of principal.
One would think old line retail establishments like shopping malls would be less relevant in the internet age. Simon Property Group (SPG) is a leading mall operator and heavy weight in most REIT ETFs listed. It’s shares have recently made 52 week highs pushing many REIT ETFs along with it to fresh highs as well.
Let’s view SPG along with the largest REIT ETF, IYR. We choose IYR due to its prominence, greater liquidity and assets under management. That said, IYR has the highest fees among the group.
Disclosure: We are long IYR and VNQ.