Abundance of Options
For those who believe the real estate market is poised for a comeback, there are several options that provide market exposure. A few of these funds are highlighted here:
- Vanguard REIT ETF (VNQ): This ETF is designed to track the performance of the MSCI U.S. REIT Index, a benchmark of U.S. property trusts that covers about two-thirds of the U.S. REIT market.
- iShares Dow Jones U.S. Real Estate Index (IYR): IYR tracks the diversified Dow Jones U.S. Real Estate Index. This index holds a number of REITs with interests in a wide variety of real property, including shopping malls, storage facilities, residential properties, and timber.
- SPDR DJ Wilshire International Real Estate (RWX): This State Street fund offers exposure to real estate markets throughout the world. In addition to U.S. real estate (43% of fund holdings), IYR holds assets in Japan (12%), Australia (8%), and the UK (8%). RWX has outperformed the majority of U.S.-only real estate ETFs over the past year.
- ProShares Ultra Real Estate (URE): URE is a leveraged ETF, meaning that it is generally inappropriate for buy-and-hold investors and is primarily used by day traders. For sophisticated investors looking to generate a quick intraday profit, URE may be a useful tool. Given the frequency with which important real estate related information is released (new construction, median home prices, etc.) real estate indices often experience significant one-day movements that can be exacerbated with leveraged funds.
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