Exchange Traded Funds for REITs

Many of the big dividends that show up on Smart Dividend are from Real Estate Investment Trust. No brainer. It has a little to do with the nature of the R.E. business, and a lot with the way REIT are regulated.

If you tend to be long in REIT stocks in order to capture these dividends, you may want to edge yourself against Real Estate fluctuations by short selling a REIT ETF, or buying a put option. If you are mostly concerned with residential Real Estate however, you may be better off with shorting a ETF that track home builders like ITB or XHB. See also: Dividend ETFs

StreetTracks Dow Jones Wilshire REIT

StreetTracks Dow Jones Wilshire REIT (RWR) is the most commerical-focused REIT ETF. It includes office, regional retail, local retail, industrials and hotels, all commercial properties comprising 66% of the fund. Residential are only 20%. It has a 0.25% expense ratio.

IShares Dow Jones U.S. Real Estate (IYR)

IShares Dow Jones U.S. Real Estate (IYR), with a 0.48% expense ratio, is the only REIT ETF to hold non-trust positions. It has 5% of its funds invested directly in real estate companies, 2% in forest products and paper and 1% in financial services..

Vanguard REIT (VNQ)

Vanguard REIT (VNQ) has the cheapest expense ratio at 0.12%.

iShares Cohen & Steers Realty Majors

iShares Cohen & Steers Realty Majors (ICF) is the largest of REIT ETFs, with net assets above $2Bn.

iShares Dow Jones US Home Construction

Created in 2006, iShares Dow Jones US Home Construction (ITB) is the newest kid in town. Because of its small size, ITB may be difficult to Short, and no option are avaialble for it yet.