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Sunday, February 20, 2011

2011 stock picks: REIT ETF’s REM, VNQ, KBWY.......

So you have been building up a passive income portfolio and are at a point where you want to add more diversification to what you have? REIT’s would certainly be a great addition but they are often difficult to choose from without spending a lot of time and while some of us want to spend the time to choose the best ones, many others want an easier solution. Of course, that is where ETF’s come in.We wrote about REIT ETF’s briefly last year and received a lot of positive feedback because of the lack of information about the options.

REIT ETF’s are not new but they are certainly gaining steam and right now, Vanguard’s VNQ looks like a very solid winner. It has a very low 0.13% annual fee which is by far the best you will find in the sector and pays a very reasonable 3.42% dividend yield. And things are changing fast. Last year, VNQ was the category leader but had less than $5 billion in assets under management. These days, VNQ counts on over $15 billion and has distanced itself from rivals. It has investments in 104 US REIT’s although over 40% of those assets are invested into their top 10 holdings.

Real Estate Outlook

There remains some degree of risk involved in the real estate market as many investors continue to worry about a double dip in prices and REIT ETF’s are certainly not for everyone. If you do not have much assets besides your house, you might already have a big enough exposure to the real estate market (although you would admit that exposure is not very diversified) but as your portfolio grows, gaining more exposure is probably a good thing as it will make your passive income portfolio more solid, steady and reliable in the long term.

My first recommendation would be to take a look at the 20 things that I consider when selecting ETF’s, but if you want to cut straight to the case, I would consider the two main choices here to be VNQ and RWX (an internationally diversified real estate ETF), but here are most of the options that you have:

Disclosure I am Long VNQ, REM, and KBWY.
TickerNameMarket CapPriceFees1Y ReturnDividend Yield
VNQVanguard REIT ETF$7,487,048,000.00 $55.370.1226.4173.42
IYRiShares Dow Jones US Real Estate Index Fund$3,083,396,000.00 $55.960.4724.2753.52
RWRSPDR Dow Jones REIT ETF$1,368,794,000.00 $61.020.2525.912.94
RWXSPDR Dow Jones International Real Estate ETF$1,437,894,000.00 $38.930.621.4298.69
UREProShares Ultra Real Estate$536,793,300.00 $50.620.9542.8140.77
SRSProShares UltraShort Real Estate$241,879,900.00 $18.140.95-49.8890
IFGLiShares FTSE EPRA/NAREIT Developed Real Estate ex-US Index Fund$378,322,000.00 $31.010.4815.5336.24
DRNDirexion Daily Real Estate Bull 3x Shares$178,983,000.00 $56.820.9655.5681.88
RWOSPDR Dow Jones Global Real Estate ETF$163,108,000.00 $37.070.5123.6727.08
DRWWisdomTree International Real Estate Fund$118,814,500.00 $28.630.5817.519.29
DRVDirexion Daily Real Estate Bear 3x Shares$55,288,740.00 $18.010.95-70.3960
FRIFirst Trust S&P REIT Index Fund$71,052,530.00 $14.650.525.4562.04
REMiShares FTSE NAREIT Mortgage Plus Capped Index Fund$102,114,500.00 $15.590.4816.8179.1
TAOGuggenheim China Real Estate ETF$65,004,400.00 $19.940.6511.7140.77
REZiShares FTSE NAREIT Residential Plus Capped Index Fund$70,902,000.00 $39.390.4830.3023.03
FTYiShares FTSE NAREIT Real Estate 50 Index Fund$50,580,000.00 $33.720.4824.4553.56
FFRFirst Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund$56,032,070.00 $35.020.618.5183.87
IFASiShares FTSE EPRA/NAREIT Developed Asia Index Fund$25,488,000.00 $31.860.4817.2185.99
PSRPowerShares Active U.S. Real Estate Fund$16,033,500.00 $45.810.825.7032.11
RTLiShares FTSE NAREIT Retail Capped Index Fund$14,065,000.00 $28.130.4835.172.91
FIOiShares FTSE NAREIT Industrial/Office Capped Index Fund$9,327,499.00 $26.650.4813.8563.22
IFEUiShares FTSE EPRA/NAREIT Developed Europe Index Fund$8,989,500.00 $29.970.488.6494.09
IFNAiShares FTSE EPRA/NAREIT North America Index Fund$10,000,000.00 $40.000.4823.9432.73
REKProShares Short Real Estate$19,945,040.00 $39.890.95N/A0
WREIWilshire US REIT ETF$9,100,620.00 $30.340.32N/A0
VNQIVanguard Global ex-U.S. Real Estate ETF$65,847,700.00 $50.600.35N/A0.88


  1. Real estate investment trusts are an excellent way to build wealth the trusts that own brick and mortar buildings prime real estate are just outstanding. Many reits also pay decent dividends.