Best REIT ETFs To Buy in April 2024

Real estate investment trust exchange-traded funds are becoming more popular as real estate values continue to soar, and many expect this trend will continue moving forward. But what are REIT ETFs, and what are the best options on the market?

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Key Takeaways

• REIT ETFs diversify your real estate holdings by investing in collections of REITs.

• In addition to the potential for capital appreciation, REIT ETFs pay out dividends to investors.

• REIT ETFs, like all ETFs, trade on the open market, so you can buy and sell them yourself, through a brokerage account.

What Are REIT ETFs?

REITs, for real estate investment trusts, are a form of an investment fund. Their portfolios include real estate holdings designed to provide price appreciation and income for investors. These holdings can range from single-family homes to strip malls to commercial buildings that span several acres.

Real estate ETFs incorporate diversified REIT holdings. As is the case with other types of funds, some REIT ETFs are actively managed, which means that fund mangers hand-select holdings to meet the funds’ objectives. Other REIT ETFs are designed to match the performance of an index of real estate-related securities.

8 Real Estate ETFs To Buy Right Now

These are eight of the best real estate ETFs to buy in April 2024 include:

1. Vanguard Real Estate ETF (VNQ)

• Assets under management: $64.9 billion

• Dividend yield: 2.75%

• 3-year return rate: 1.71%

• Expense ratio: 0.12%

• Top 5 holdings: Vanguard Real Estate II Index Fund Institutional Plus Shares, Prologis Inc., American Tower Corp., Equinix Inc., Simon Property Group Inc.

The Vanguard Real Estate ETF is the largest real estate ETF on the market by total assets. It provides a diversified list of REIT holdings designed to track the returns of the MSCI US Investable Market Real Estate 25/50 Index. The fund provides investors with a high level of income, though they can also expect some price appreciation.

Vanguard offers some of the lowest expense ratios in the business. The average expense ratio on Vanguard ETFs is 0.05%, though the VNQ has a slightly higher annual cost of 0.12%. Nonetheless, the fund’s fees are half of the industry average, which is 0.25% annually.

2. Charles Schwab US REIT ETF (SCHH)[3]

• Assets under management: $6.04 billion

• Dividend yield: 4.29%

• 3-year return rate: 2.31%

• Expense ratio: 0.07%

• Top 5 holdings: Prologis REIT Inc., American Tower REIT Corp., Equinix REIT Inc., Welltower Inc., Simpson Property Group REIT Inc.

The Charles Schwab US REIT ETF invests in a wide range of real estate investment trusts. The fund excludes non-REIT stocks that are commonly part of the portfolio in other real estate funds. One of the biggest draws to the fund is its expense ratio, which is far below the industry average at 0.07%.

Investors won’t give up performance in exchange for access to the low fees either, considering that it has performed well over time.

The SCHH is no small fund. It’s the second-largest real estate ETF on the market by total assets, giving a nod to its popularity among investors. The fund also trades hands more than 3.5 million times in the average trading session, so investors won’t experience liquidity issues when it’s time to exit their positions.

3. Real Estate Select Sector SPDR Fund (XLRE)[5]

• Assets under management: $5.5 billion

• Dividend yield: 3.68%

• 3-year return rate: 3.33%

• Expense ratio: 0.09%

• Top 5 holdings: Prologis Inc., American Tower Corp., Equinix Inc., Welltower Inc., Simon Property Group Inc.

The XLRE is the third-largest real estate ETF on the market by total assets, and shares of the fund trade hands nearly 8 million times during the average trading session.

Investors can diversify their holdings further with the fund because unlike many of its competitors, it doesn’t invest only in REITs. It also invests in real estate management and development stocks.

The fund’s goal is to track the Real Estate Select Sector index as closely as possible before accounting for fees, and its expense ratio is significantly lower than the industry average at just 0.09%.

The fund has earned a four-out-of-five-star rating from Morningstar, validating its historical ability to outperform its peers.

4. iShares Core U.S. REIT ETF (USRT)

• Assets under management: $2.2 billion

• Dividend yield: 3.22%

• 3-year return rate: $4.02

• Expense ratio: 0.08%

• Top 5 holdings: Prologis Inc., Equinix Inc., Welltower Inc., Simon Property Group Inc., Simon Property Group Inc.

USRT’s objective is income and growth. This ETF appeals to investors looking for broad, long-term exposure to a variety of U.S. real estate property sectors. The fifth-largest REIT by assets, this fund from BlackRock tries to match the performance of the FTSE Nareit Equity REITS Index. USRT’s portfolio contains 130 holdings, and it boasts a low 0.08% expense ratio.

5. Invesco Active US Real Estate ETF (PSR)

• Assets under management: $63.6 million

• Dividend yield: 4.29%

• 3-year return rate: 0.78%

• Expense ratio: 0.35%

• Top 5 holdings: Equinix Inc., Crown Castle Inc., Prologis Inc., Kimco Realty Corp., AvalonBay Communities

Whereas most ETFs in this roundup are index funds, Invesco’s Active U.S. Real Estate ETF is an actively managed fund that invests mostly in REITs included in the FTSE Nareit All Equity REITS Index. Fund managers review the portfolio each month with the goal producing income and achieving high total returns through capital growth.

As an actively managed fund, PSR’s expense ratio is high compared to the ratios of index funds. Although its return is comparatively low, its dividend yields 4.29%.

6. Invesco S&P 500 Equal Weight Real Estate ETF (RSPR)

• Assets under management: $53.92 billion

• Dividend yield: 3.65%

• 3-year return rate: 3.20%

• Expense ratio: 0.40%

• Top 5 holdings: Healthpeak Properties, Welltower Inc., AvalonBay Communities Inc., Realty Income Corp., Federal Realty Investment Trust

Investors looking for exposure to large-cap REITs might like the Invesco S&P 500 Equal Weight Real Estate ETF. The fund invests at least 90% of its assets in securities included in the real estate sector of S&P 500. Although each holding is weighted equally, the index and RSPR both are rebalanced each month.

RSPR has a four-out-of-five-star rating from Morningstar. A comparatively low average trading volume suggests this ETF could be less liquid and others in this roundup, but it could also be less volatile.

7. Global X SuperDividend REIT ETF (SRET)

• Assets under management: $212.63 million

• Dividend yield: 7.53%

• 3-year return rate: -4.03%

• Expense ratio: 0.59%

• Top 5 holdings: National Health Investors Inc., Omega Healthcare, Rithm Capital Corp., Sabra Health Care REIT, LTC Properties Inc.

At first glance, negative returns over three years might give you pause. But SRET’s 30-day yield is 7.53%, and its 12-month trailing yield is even higher. The fund’s objective it to generally track the price and yield of the Solactive Global SuperDividend REIT Index. The index, in turn, tracks the 100 of the world’s highest-dividend-yielding securities, weighting each equally, according to VettaFi.

While this is a risky fund because of its reliance on dividends and international holdings, it has distributed dividends every month for the past nine years.

8. VanEck Mortgage REIT (MORT)

• Assets under management: $261.87 million

• Dividend yield: 13.14%

• 3-year return rate: -5.10%

• Expense ratio: 0.43%

• Top 5 holdings: Annaly Capital Management Inc., Agnc Investment Corp., Starwood Property Trust Inc., Rithm Capital Corp., Blackstone Mortgage Trust Inc.

The VanEck Mortgage REIT tries to replicate the price and yield of the MVIS US Mortgage REITs Index, which tracks the overall performance of U.S. mortgage REITs. It provides exposure to a range of mortgage investments, which means it’s sensitive to changing interest rates and regulations, as VanEck notes in its fund description.

On the upside, mortgage REITs often provide better yields compared to other types of REITs, as MORT’s yield demonstrates.

How To Invest in REIT ETFs

ETFs, including REIT ETFs, trade on stock exchanges, such as the New York Stock Exchange, so you can purchase them through an investment brokerage. What’s more, ETFs trade similarly to stocks — you can buy and sell whenever the markets are open. Here are the steps to take:

1. Open an account on your preferred brokerage website.

2. Link a bank account to your new brokerage account so that you can transfer funds to pay for your trades.

3. Research REIT ETFs on the broker’s website, paying careful attention to features like expense ratio, fund objective, dividend yield and performance.

4. With the REIT you want on your screen, click the purchase or trade button to start your order. Follow the prompts to submit the order.

5. Watch for confirmation that your trade went through.

REIT ETF FAQs

You'll find answers to some of the most common questions about investing in real estate ETFs below:

• Are REIT ETFs a good investment?

  • REIT ETFs are a great investment for the right investor. Known for providing meaningful dividends and relatively stable growth, they’re an excellent option for risk-averse investors who depend on their investments' income. However, investors who are more interested in price appreciation than income should nest their investment dollars in another investment vehicle.

• Is Vanguard Real Estate ETF a good investment?

  • The Vanguard Real Estate ETF is the largest on the market by total assets and has a long history of providing meaningful income for investors. However, there’s no such thing as an investment option that’s perfect for all investors. As with most other REIT ETFs, Vanguard is best for risk-averse investors who are more focused on income generation than price appreciation.

• How do you buy real estate ETFs?

  • 1. Log in to your account with your favorite online stock brokerage. 2. Search for the ticker associated with the fund. For example, investors interested in the Vanguard Real Estate ETF should search their broker’s website for “VNQ.” 3. Click the "Buy" button and fill out all required fields. 4. Verify everything is correct. 5. Place your order.

• Do REITs pay dividends?

  • The U.S. Securities and Exchange Commission requires REITs to pay at least 90% of their taxable income to shareholders, so these funds are generally associated with large dividend payments.

Joshua Rodriguez contributed to the reporting for this article.

Methodology: GOBankingRates looked at the 22 REIT ETFs available in U.S. markets, per ETF.com. Selections for this roundup were based on assets under management, 30-day SEC dividend yields and three-year annualized performance as well as expense ratios. The picks represent a diverse grouping — broad and narrow, index and actively managed — to appeal to range of investment styles and goals.

Information is accurate as of April 24, 2024.

GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack Inc., an online marketing company serving top-tier banks, credit unions and other financial services organizations. Some companies mentioned in this article might be clients of ConsumerTrack Inc., which serves more than 100 national, local and online financial institutions. Rankings and roundups are completely objective, and no institution, client or otherwise, paid for inclusion or specific placement. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by the companies included in the article.

GOBankingRates bases its assessment of “best” and “top” products on the above-stated parameters to create a baseline for comparison. This assessment is an approximation of “best” and “top” designed to help consumers find products that might be appropriate for them. There could be other options available as well. Consumers should consider various options appropriate for their circumstances.

This article originally appeared on GOBankingRates.com: Best REIT ETFs To Buy in April 2024