REIT ETFs

There are two categories of real estate related index funds: REITs and Builders. These funds have had mixed performances so far since their respective launches. In my previous blog, I had summarized the ETFs related to builders. In this blog I am trying to find the differences among the REIT ETFs. There are eight (5 US & 3 International) ETFs related to REITs:

FTY - iShares FTSE NAREIT Real Est 50 Index ETF
IYR - iShares Dow Jones U.S. Real Estate Index Fund
ICF - iShares Cohen & Steers Realty Majors Index Fund
RWR- streetTRACKS Wilshire REIT index fund
VNQ - Vanguard REIT ETF

IYR is the most diversified REIT index (including all legally defined REITs, such as commercial real estate, forest REITS such as Plum Creek, or mortgage REITs like iStar Financial). It has more than 80 components. It trades most often among investors. Its average daily trading volume of 7 million shares per day is the highest among all REIT ETFs.

ICF has only 30 components concentrated on commercial real estate companies only. However, the components are specially selected by Cohen & Steers Company. It is the most popularly held ETF in this category. Its net asset value of $2.44 billion is among the highest.

VNQ and RWR are similarly structured. These two ETFs have the lowest expense ratios (0.12% for VNQ and 0.25% for RWR). Both ETFs exclude forest REITs and mortgage REITs. So they are more similar to ICF than IYR. Since most people can own an index fund at Vanguard which is almost exactly same as VNQ. So I would prefer to own RWR in non-Vanguard accounts.

DRW - WisdomTree International Real Estate Fund

RWX - SPDR DJ Wilshire International REIT Index Fund

WPS - iShares S&P World Property ex-US

The non-US REIT index funds are relatively new. So there is no comparison between the international ETFs and other US-based ETFs. It might be an important diversifier for the REIT asset class.