REZ: A House Tour Of The iShares Residential REIT ETF
Among the most popular real estate “sub-sector” ETF, the iShares Residential Real Estate Capped ETF offers focused exposure to 44 of the largest rental landlords in the United States.
“Renter Nation” has been very good to REZ investors. Residential REITs have outperformed the broader sector over nearly every recent measurement period.
This run of outperformance is no coincidence. The effects of the historic underinvestment in new home construction continues to put upward pressure on rent growth and border housing inflation.
The mounting housing shortage is amplified by a large demographic wave of young millennials hitting the housing market. Rent growth was impressive in 2018 despite record apartment supply growth.
There are some idiosyncrasies that investors should be aware of. The ETF is quite “top-heavy” and invests in property types not typically associated with “residential”, including hospitals and medical office buildings.