Economics, Housing, & Commercial Real Estate Analysis

Keepin' It Real 

Apartment REITs
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Data Center REITs
Mall REITs
Net Lease REITs
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  • Alex Pettee, CFA

VNQ: A David Vs. Goliath Story

  • Real estate ETFs are an excellent option for investors seeking low-cost, liquid, and diversified exposure to real estate. ETFs can complement or "anchor" an actively-managed strategy of selecting individual REITs.

  • Our ETF Spotlight Series has taken us across the fund landscape from High Yield REIT ETFs and CEFs to newer innovative funds offering a more growth-oriented approach to real estate.

  • The plain-vanilla "Core REIT" ETFs still rule the day, however, led by Goliath VNQ. We compare VNQ to five other ETFs that offer "cheap beta" exposure to commercial real estate.

  • Due to the market-capitalization weighting system and the dynamics of the REIT sector, these ETFs tend to overweight the largest and relatively highest-valued and lowest-yielding REITs.

  • With as much as 60% of weight in its Top-10 holdings, these ETFs may not offer the level of diversification that many investors assume. The property sector exposure also varies significantly between these funds.

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Hotel REITs
Single Family Rental REITs
Mobile Home REITs
Healthcare REITs
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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. Nothing on this site is intended to be investment advice or an offer to buy or sell securities. The risks of investing in real estate securities are similar to those associated with direct investments in real estate, including falling property values, lack of liquidity, limited diversification, and sensitivity to certain economic factors such as interest rate changes and market recessions. No representation or warranty is made as to the efficacy of any particular strategy or fund, or the actual returns that may be achieved. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. Data quoted represents past performance, which is no guarantee of future results. The views and opinions in the preceding commentary are as of the date of publication and are subject to change without notice. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital, and there is no guarantee that investors will experience the type of performance reflected. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any trend cited in this market commentary will be realized. This material represents an assessment of the market environment at a specific point in time, should not be relied upon as investment advice, is not intended to predict or depict performance of any investment and does not constitute a recommendation or an offer for a particular security. We consider the information in this presentation to be accurate, but we do not represent that it is complete. It should not be relied upon as investment advice or as the sole source of suitability for investment. Please consult with your investment, tax or legal adviser regarding your individual circumstances before investing.

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