Investing directly in real estate properties requires a large amount of capital and many other resources that most average investors cannot access. But, for investors looking to gain exposure to the real estate market and the many benefits of real estate investing, REITs (real estate investment trusts) are the way to go. They offer investors exposure to real estate and the mortgage industry, serving growth potential. If you’re looking to diversify your portfolio with REIT ETFs, look no further.
Below, I discuss three different REIT ETFs that offer investors looking for safe and reliable returns in the real estate and mortgage markets some great options to check out.
iShares Mortgage Real Estate Capped ETF (REM)
iShares Mortgage Real Estate Capped ETF (NYSEARCA:REM) is a fund composed of companies that engage in selling mortgage servicing rights and other loan types, such as mortgage-backed securities, which are home loans that are bundled together and investors who are holding mortgage-backed securities will receive interest payments on those loans on a predictable basis. They are much like bonds in that way. Mortgage REITs fare better than other real estate companies during a high-interest rate environment.
The fund was created on May 1, 2007, and tracks the FTSE Nareit All Mortgage Capped Index. It has an expense ratio of approximately 0.48%. The fund also offers an annual dividend payout of 10.18%, with its most recent payment being 56 cents per share, which was paid to investors on Oct. 2. The fund issuer is BlackRock Financial Management (NYSE:BLK), with a one-month average volume of 536,000. And they also have $580 million in assets under management.
This ETF has 32 different holdings and the top three include Annaly Capital Management (NYSE:NLY), based in New York, New York. It finances mortgages and other similar loan products and represents 16% of the fund. Starwood Property Trust (NYSE:STWD) provides commercial and residential loan servicing and represents 11% of the fund. Finally, AGNC Investment (NASDAQ:AGNC), located in Bethesda, Maryland, operates as a provider of primarily residential mortgage-backed securities. It composes 9% of the total fund.
Vanguard Real Estate Fund ETF (VNQ)
Vanguard Real Estate Fund ETF (NYSEARCA:VNQ) is the largest real estate investment fund based on assets under management. It tracks The MSCI US Investable Market Real Estate 25/50 Index. They have an expose ratio of 0.12% and were created on Sept. 23, 2004. This ETF is focused on a wide range of real estate investment companies. They have $28.1 billion in assets under management and have a single-month average volume of just over 6 million. They have a dividend yield of approximately 4.80% on an annual basis.
The fund carries 160 separate holdings and the top three for this ETF include Prologis (NYSE:PLD), an industrial real estate investment trust that owns and leases large-scale logistic facilities in nearly 20 countries. They make up 7% of the fund. Next is American Tower (NYSE:AMT), a company that invests in telecom infrastructure and comprises 6% of the fund. Lastly, Equinix (NASDAQ:EQIX) is a leading provider in data center real estate; it composes 5% of the total fund.
iShares Core U.S. REIT ETF (USRT)
Lastly, iShares Core REIT ETF (NYSEARCA:USRT) is a fund that tracks the FTSE Nareit Equity REITS Index. It’s among the REIT ETFs BlackRock Financial Management handles, created on May 1, 2007. The fund’s goal is to have diversified exposure to the real estate market and focus on long-term potential returns. Their expense ratio is approximately 0.08%, and they offer an annual dividend payout of 3.70%. It has a one-month average volume of 429,000 and $2 billion in assets under management.
This ETF has 135 holdings and the top three include the aforementioned Prologis and Equinox, and Welltower (NYSE:WELL), an REIT that specializes in the investment of health care infrastructure, which makes up 5% of the fund.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
