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Best REIT ETFs to buy in 2022
REIT ETFs are low-cost and low-risk alternatives to investing directly in physical property assets. These funds provide consistent and high dividends that appeal to long-term investors as a retirement income stream. This beginners’ guide has selected the best of the current market for you to place the right investment.
What are the top REIT ETFs to buy?
Our analysts have selected five of the best REIT ETFs for this year as displayed in the table below. Continue scrolling further to learn more about each in turn.
|#||ETF symbol||ETF name|
|1||REM||iShares Mortgage Real Estate ETF|
|2||PFFR||InfraCap REIT Preferred ETF|
|3||SCHH||Schwab US REIT ETF|
|4||RWR||SPDR Dow Jones REIT ETF|
|5||SPRE||SP Funds S&P Global REIT Sharia ETF|
1. iShares Mortgage Real Estate ETF (BATS: REM)
REM seeks to track the performance and yield of an index composed of US REITs that hold US commercial and residential mortgages. Therefore, investing in REM gives you direct exposure into this niche sector.
It also gives you targeted access to a subset of domestic real estate stocks and real estate investment trusts (REITs), which invest in real estate directly and trade like stocks. Long term investment in this fund enables a potential steady passive income stream as a result.
2. InfraCap REIT Preferred ETF (NYSEARCA: PFFR)
PFFR is a fund that corresponds with the performance of the Indxx REIT Preferred Stock Index. It is the only ETF that offers preferred securities issued by REITs and thereby attracts a guaranteed niche pool of investors.
The fund comprises approximately 67% property REITs and 33% mortgage REITs. This balance allows for a generally more predictable revenue stream and appeals to long-term investors seeking a more stable investment in REITs.
3. Schwab US REIT ETF (NYSEARCA: SCHH)
SCHH is a fund that seeks to align with the performance of the Dow Jones Equity All REIT Capped Index. Its 141 holdings are in a range of REITs (i.e. specialized, residential, industrial, retail, healthcare).
A large number of holdings means lower specific-holding risk for new investors. Furthermore, it must be noted for investors wishing to focus on specific types of REITs that SCHH specifically excludes mortgage and hybrid REITs.
4. SPDR Dow Jones REIT ETF (NYSEARCA: RWR)
RWR is a fund that aims to correspond with the Dow Jones US Select REIT Index. The fund specifically offers investors exposure to publicly traded REIT securities in the US. Providing investors with a diverse range of REITs (i.e. industrial, residential, retail, healthcare, self storage).
RWR is a more stable option as it also requires that its holdings comply with the REIT Act of 1960. The legal basis for filtration should be reassuring to new investors looking to add RWR to their portfolio as a complementary or core performer.
5. SP Funds S&P Global REIT Sharia ETF (NYSEARCA: SPRE)
SPRE is an islamic sharia-law compliant fund that aims to reflect the performance of the S&P Global All Equity REIT Shariah Capped Index. Its 32 holdings constitute a collective investment scheme in real estate that brings together the prime features of real estate and trust fund.
The fund offers the benefit of diversification to your portfolio, though it must be noted that it is designed for investors that can grasp the fundamentals of sharia law. Its high dividend and higher income characteristics draw substantial investor interest.
Where to buy the best REIT ETFs
Registering with an online broker is key for investing in an ETF. ETFs are like individual stocks, you can buy or sell them as you wish. The table below features our preference of the best brokers that offer REIT ETFs.
What is a REIT ETF?
It’s an exchange traded fund that holds shares in the real estate sector. REIT ETFs provide investors more affordable exposure to the industry as compared to other options. These funds traditionally focus on real estate investment trusts (securitised portfolios of real estate properties).
REIT ETFs can prove ideal for long-term investors as they provide a passive income stream in addition to mainstream stock liquidity. This is because investing in these funds allows you to receive dividends. Although you are likely to gain less of a return than you would from a direct investment in property, there is lower risk associated with REIT ETFs.
Are REIT ETFs a good investment?
Yes, as REIT ETFs often outperform the market. These funds have historically delivered competitive total returns based on capital appreciation in the long run. Therefore, REIT ETFs are intended for long-term investors – you must have patience to hold out for a return in your investment.
These funds also offer ideal diversification for a long-term portfolio. Due to the low-risk nature of holdings, REIT ETFs can hedge against overall risk and increase returns. Additionally, high and steady dividends provide a stable passive income stream that can prove a safety net for retirement.
The best part is that REITs are low-risk – when the price of other investments go down, the price of these ETFs tends to go up. This is because unlike other stocks, they are correlated with the returns of other equities and fixed-income investments. Do your own due diligence, use the links below to best place your investment in REIT ETFs.
Latest ETF news
S&P 500 falls again as bears push stocks toward another losing week
Expert opinion: JPMorgan stock down 30% isn’t ‘that appealing’
Bill Nygren gives away his favourite financial stock
TJX stock rises by 10% after announcing its financial results for Q1 2023
Piper Sandler: S&P 500 index is yet to find a tradeable bottom
Major Tesla shareholder demands $15 billion stock buyback
Fact-checking & references
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