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8 REIT ETFs to Buy Now

CEO Khai Intela
Investing in REITs, or real estate investment trusts, has long been recognized as an effective strategy for protecting against inflation. However, selecting the right individual REITs can be overwhelming due to the risks associated with...

Investing in REITs, or real estate investment trusts, has long been recognized as an effective strategy for protecting against inflation. However, selecting the right individual REITs can be overwhelming due to the risks associated with asset selection. A better alternative for investors may be to consider buying exchange-traded funds (ETFs) that focus on REITs. These REIT ETFs offer immediate diversification benefits from the start.

In addition to the well-known inflation protection offered by REITs, investing in REIT ETFs also helps diversify risks associated with the stock and bond markets. Furthermore, some of the selected ETFs on this list offer high income yields, international diversification among REITs, and sector-specific exposure.

If growth is your objective, sector-specific REIT ETFs can tilt the odds in your favor. Datacenter-focused REITs, industrial real estate developers, and cell tower landlords are still promising avenues for strong growth. On the other hand, office and healthcare REITs may offer value plays.

Despite the stock market's recent sell-off, investors are still finding value and attractive investment options, as evidenced by a net increase of funds invested in REIT ETFs over the past three months. According to VettaFi (formerly ETF Database), approximately $4 billion in net new funds have flowed into REIT ETFs during this period.

Let's take a closer look at the ETFs you can buy right now to access diverse exposure to REITs.

REITs: Vanguard Real Estate Index Fund (VNQ)

8 REIT ETFs to Buy Now Expense Ratio: 0.12%

The Vanguard Real Estate Index Fund (VNQ) is the largest REIT ETF in the world, with over $82 billion in assets under management. It passively tracks the MSCI US Investable Market Real Estate 25/50 Index, providing wide exposure to the REIT asset class. With nearly 95.5% of its holdings allocated to pure REITs, investors in VNQ will own a diversified real estate portfolio and enjoy exposure to a range of REITs and other real estate-related assets. The fund is passively managed with a low expense ratio of 0.12% and offers a dividend yield of approximately 3%.

Schwab U.S. REIT ETF (SCHH)

Expense Ratio: 0.07%

The Schwab U.S. REIT ETF (SCHH) is one of the largest and most diversified real estate ETFs, with over $6.3 billion in assets invested in more than 140 individual REITs. It offers investors simple and low-cost access to REITs, excluding non-REIT stocks that are sometimes included in other real estate offerings. With an expense ratio of 0.07% and a quarterly distribution yield of approximately 3.3%, SCHH provides a cost-effective way to gain exposure to the real estate market.

Real Estate Select Sector SPDR Fund (XLRE)

Expense Ratio: 0.1%

The Real Estate Select Sector SPDR Fund (XLRE) is one of the largest REIT ETFs by assets under management, with over $5.4 billion in net assets. XLRE offers exposure to the real estate sector of the S&P 500 Index, with a diverse portfolio that includes real estate management and development companies, as well as equity REITs. The fund excludes mortgage REITs from its holdings. With an expense ratio of 0.1% and quarterly dividends yielding approximately 2.8%, XLRE provides a low-cost option for investing in the real estate sector.

Global X Super Dividend REIT ETF (SRET)

8 REIT ETFs to Buy Now Expense Ratio: 0.58%

Income-oriented investors seeking high distribution yields and global diversification may find the Global X Super Dividend REIT ETF (SRET) appealing. SRET holds 29 of the highest yielding REITs in the world, with approximately 53% of its assets invested in U.S. REITs and the remainder allocated to developed Asia, Canada, and Australia. The ETF pays distributions that yield 7.1% annually and has a reasonable expense ratio of 0.58%.

Hoya Capital High Dividend Yield ETF (RIET)

Expense Ratio: 0.25%

The Hoya Capital High Dividend Yield ETF (RIET) is a recently launched REIT ETF that invests in high dividend yield paying real estate equity securities. The fund allocates around 90% of its assets to REIT common equity and approximately 10% to preferred stock. RIET's investment strategy focuses on high-quality, high-yielding publicly traded real estate assets. With a waived management fee until the first ETF launch anniversary in September 2022, RIET offers investors a total expense ratio of 0.25%. The fund pays a dividend that yields 7.3% annually.

Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR)

8 REIT ETFs to Buy Now Expense Ratio: 0.6%

The Pacer Benchmark Data and Infrastructure Real Estate SCTR ETF (SRVR) provides investors with exposure to global developed market REITs and real estate companies in the fast-growing data and infrastructure sector. The ETF has over $1.2 billion in net assets and tracks the Kelly Data Center & Tech Infrastructure Index. With approximately 80% of its assets invested in U.S. REITs and the remaining balance spread across Europe, Australasia, and Asia, SRVR offers an internationally diversified portfolio. The fund has a total expense ratio of 0.6% and pays distributions that yield 1.1% annually.

iShares Residential and Multisector Real Estate ETF (REZ)

Expense Ratio: 0.48%

The iShares Residential and Multifactor Real Estate ETF (REZ) provides investors with direct access to the U.S. residential sector, healthcare REITs, and self-storage real estate equities. Managed by BlackRock, one of the world's largest asset managers, REZ has over $1 billion in net assets. With an expense ratio of 0.48% and quarterly distributions yielding approximately 1.8%, REZ offers investors exposure to the sustained resilience of the U.S. housing sector and the potential growth in healthcare and self-storage spaces.

Pacer Benchmark Industrial Real Estate SCTR ETF (INDS)

8 REIT ETFs to Buy Now Expense Ratio: 0.6%

The Pacer Benchmark Industrial Real Estate SCTR ETF (INDS) provides investors with direct and diversified access to industrial real estate economics. The ETF has grown its assets under management from around $40 million in 2018 to over $320 million today. With an expense ratio of 0.6% and quarterly distributions that yield approximately 1.3%, INDS offers growth-oriented investors an opportunity to take advantage of the potential for above-average capital gains.

These eight REIT ETFs provide investors with diverse exposure to the real estate market, offering opportunities for income and growth. As always, it's important to conduct thorough research and consider your investment goals before making any financial decisions.

On the date of publication, I do not hold any positions in the securities mentioned in this article. The opinions expressed in this article are solely those of the author, and do not necessarily reflect the views of the company.

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