2011 stock picks: REIT ETF’s

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.

Ticker	Name	Market Cap	Price	Fees	1Y Return	Dividend Yield
VNQ	Vanguard REIT ETF	$7,487,048,000.00	$55.37	0.12	26.417	3.42
IYR	iShares Dow Jones US Real Estate Index Fund	$3,083,396,000.00	$55.96	0.47	24.275	3.52
RWR	SPDR Dow Jones REIT ETF	$1,368,794,000.00	$61.02	0.25	25.91	2.94
RWX	SPDR Dow Jones International Real Estate ETF	$1,437,894,000.00	$38.93	0.6	21.429	8.69
URE	ProShares Ultra Real Estate	$536,793,300.00	$50.62	0.95	42.814	0.77
SRS	ProShares UltraShort Real Estate	$241,879,900.00	$18.14	0.95	-49.889	0
IFGL	iShares FTSE EPRA/NAREIT Developed Real Estate ex-US Index Fund	$378,322,000.00	$31.01	0.48	15.533	6.24
DRN	Direxion Daily Real Estate Bull 3x Shares	$178,983,000.00	$56.82	0.96	55.568	1.88
RWO	SPDR Dow Jones Global Real Estate ETF	$163,108,000.00	$37.07	0.51	23.672	7.08
DRW	WisdomTree International Real Estate Fund	$118,814,500.00	$28.63	0.58	17.51	9.29
DRV	Direxion Daily Real Estate Bear 3x Shares	$55,288,740.00	$18.01	0.95	-70.396	0
FRI	First Trust S&P REIT Index Fund	$71,052,530.00	$14.65	0.5	25.456	2.04
REM	iShares FTSE NAREIT Mortgage Plus Capped Index Fund	$102,114,500.00	$15.59	0.48	16.817	9.1
TAO	Guggenheim China Real Estate ETF	$65,004,400.00	$19.94	0.65	11.714	0.77
REZ	iShares FTSE NAREIT Residential Plus Capped Index Fund	$70,902,000.00	$39.39	0.48	30.302	3.03
FTY	iShares FTSE NAREIT Real Estate 50 Index Fund	$50,580,000.00	$33.72	0.48	24.455	3.56
FFR	First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund	$56,032,070.00	$35.02	0.6	18.518	3.87
IFAS	iShares FTSE EPRA/NAREIT Developed Asia Index Fund	$25,488,000.00	$31.86	0.48	17.218	5.99
PSR	PowerShares Active U.S. Real Estate Fund	$16,033,500.00	$45.81	0.8	25.703	2.11
RTL	iShares FTSE NAREIT Retail Capped Index Fund	$14,065,000.00	$28.13	0.48	35.17	2.91
FIO	iShares FTSE NAREIT Industrial/Office Capped Index Fund	$9,327,499.00	$26.65	0.48	13.856	3.22
IFEU	iShares FTSE EPRA/NAREIT Developed Europe Index Fund	$8,989,500.00	$29.97	0.48	8.649	4.09
IFNA	iShares FTSE EPRA/NAREIT North America Index Fund	$10,000,000.00	$40.00	0.48	23.943	2.73
REK	ProShares Short Real Estate	$19,945,040.00	$39.89	0.95	N/A	0
WREI	Wilshire US REIT ETF	$9,100,620.00	$30.34	0.32	N/A	0
VNQI	Vanguard Global ex-U.S. Real Estate ETF		$65,847,700.00	$50.60	0.35	N/A	0.88