ETFs investing in the real estate sector should be a necessary addition to portfolios with a long term horizon even though the sector has traversed through rough waters in the recent past. Real estate ETFs have delivered significantly high returns in the past and offer a convenient method for investing in this sector. With their low initial investment requirements, well diversified portfolios and professional management they can go a long way in lowering the risk involved. They also bring stability and steady returns to portfolios over the long term.
Below are 3 of the most popular Real Estate ETF’s.
ishares FTSE NAREIT Residential (REZ) seeks to replicate the yield and price performance of the FTSE NAREIT All Residential Capped Index. This ETF holds Real Estate Investment Trusts in the residential, self storage and healthcare sectors. The expense ratio of this ETF is 0.48% around the category average of the its category. The yield on this 2.94%.
ishares Cohen & Steers Realty Majors (ICF) tries to replicate the performance of the Cohen and Steers Realty Majors Index. This ETF has a below average expense ratio for its category of 0.35%. The three largest holdings in this ETF are Simon Property Group, Equity Residential and Vornado Realty Trust.
ishares Dow Jones US Real Estate (IYR) seeks to replicate the performance and yield of the Dow Jones US Real Estate Index. This ETF has an expense ratio of 0.47% above its category average of 0.42%. This ETF currently yields a healthly 3.66%.
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