REIT<\/p>\n<\/td>\n
Ticker<\/p>\n<\/td>\n
Dividend Yield<\/p>\n<\/td>\n
AUM<\/p>\n<\/td>\n
Expenses<\/p>\n<\/td>\n<\/tr>\n
3.37%<\/p>\n<\/td>\n
$34.68 billion<\/p>\n<\/td>\n
0.10%<\/p>\n<\/td>\n<\/tr>\n
2.84%<\/p>\n<\/td>\n
$2.13 billion<\/p>\n<\/td>\n
0.25%<\/p>\n<\/td>\n<\/tr>\n
2.86%<\/p>\n<\/td>\n
$2.87 billion<\/p>\n<\/td>\n
0.35%<\/p>\n<\/td>\n<\/tr>\n
3.52%<\/p>\n<\/td>\n
$5.78 billion<\/p>\n<\/td>\n
0.47%<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What is immediately striking about this group is the pitifully low yield on RWR and ICF.\u00a0 For an asset class that is ostensibly income-focused, that is simply not a high enough yield to warrant serious consideration.<\/p>\n Each of these ETFs uses a slightly different index to track the sector, but their top ten holdings are nearly identical.\u00a0 Simon Property Group ($<\/span>SPG<\/a>)<\/b> is the single largest holding in all four ETFs, and HCP Inc ($<\/span>HCP<\/a>), Public Storage ($<\/span>PSA<\/a>), Vornado ($<\/span>VNO<\/a>), <\/b>and Equity Residential ($<\/span>EQR<\/a>) <\/b>feature prominently as well.<\/p>\n While there is nothing \u201cwrong\u201d with these large-cap REITs, some of them have yields that are a little less than impressive for securities that were designed to be income vehicles.\u00a0 Simon Property Group, the largest holding in all four ETFs, yields only 2.9%.<\/p>\n Some of these REITs\u2014and Vornado has been a high-profile case of this in recent years\u2014have evolved away from pure landlording and have moved to become \u201cdeal making\u201d growth vehicles in which property speculation is as important (or more so) than collecting rent checks.\u00a0 Again, there is nothing inherently \u201cwrong\u201d with this, but it may not be what you are looking for if you consider yourself an income investor.<\/p>\n Figure 1: Large-Cap Equity REIT ETFs<\/p>\n<\/div>\n Not surprisingly, since all four large-cap REIT funds hold substantially the same securities, they tend to track each other pretty closely (see Figure 1).\u00a0 Given that these are index investments with no active management in place, the smartest course of action is to buy the ETF with the highest yield and lowest management fee.\u00a0 This leaves us with the Vanguard REIT ETF and the iShares Dow Jones US Real Estate.<\/p>\n The iShares Dow Jones US Real Estate has a slightly higher current yield (15 basis points) though its management fee is 37 basis points higher.<\/p>\n Normally, I would call that close enough to be a wash.\u00a0 But the Vanguard ETF is a purer play on actual property-owning equity REITs, whereas the iShares fund has exposure to mortgage REITs and to non-REIT development and holding companies such as Alexander and Baldwin ($<\/span>ALEX<\/a>),<\/b> which, among other things, produces sugar and coffee on Hawaiian plantations.<\/p>\n For broad large-cap REIT exposure, go with Vanguard\u2019s VNQ.\u00a0 I would consider this appropriate for a long-term asset allocation, and\u2014in the interests of full disclosure\u2014that is exactly how I utilize it myself.<\/p>\n <\/p>\n
\nLet\u2019s start with the biggest and most popular ETFs in the segment, which hold the largest-cap equity REITs.\u00a0 In this space, we have the Vanguard REIT ETF ($<\/span>VNQ<\/a>)<\/b>, the SPDR Dow Jones REIT ($<\/span>RWR<\/a>)<\/b>, the iShares Cohen & Steers Realty Majors ($<\/span>ICF<\/a>) <\/b>and the iShares Dow Jones US Real Estate ETF ($<\/span>IYR<\/a>). \u00a0<\/b><\/p>\n![\"LC](\"http:\/\/charlessizemore.com\/wp-content\/uploads\/2013\/06\/LC-REITS.gif\")
<\/a><\/p>\nSpecialty REITS<\/h1>\n