ETF Talk: This Real Estate Fund Outperforms the Rest
While the real estate market has been in the dog house since the beginning of the Great Recession, I found a fund focused on real estate that actually has been holding up reasonably well most of the year. The iShares FTSE NAREIT Residential Plus Capped Index Fund (REZ) has outperformed other real estate exchange-traded funds (ETFs) so far this year. But with the real estate sector still sluggish and its recovery slow, why has REZ been able to stand out? Here’s a brief analysis.
The iShares FTSE NAREIT Residential Plus Capped Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE NAREIT All Residential Capped Index. To learn further about the fund, take a look at its top 10 daily holdings of REZ: Equity Residential, 8.93%; Public Storage, 8.80%; HCP Inc., 8.48%; Ventas Inc., 8.27%; Avalon Bay Communities, 6.42%; Health Care REIT Inc., 4.82%; Essex Property Trust Inc., 4.31%; UDR Inc., 4.20%; Camden Property Trust, 4.14%; and BRE Properties Inc., 3.86%.
On a sector basis, the fund’s biggest real-estate holdings consist of apartment investments, 49%, while healthcare real estate accounted for 33%. The apartment sector has continued to be one of the best-performing real estate sectors in the country. As people lose their homes to foreclose, they go into rental properties. Others who are waiting for housing prices to fall further before trying to buy also rent. In addition, banks have made buying a home more difficult, as mortgage requirements are far too stringent for the average new home buyer to hurdle. These issues not only have led to people moving into rentals, but also staying in them longer.
Many markets, especially those with a higher percentage of young adults and students, tend to have amazingly resilient real estate markets. REZ gives investors exposure to this sector. So, while this is not a traditional real estate ETF in the truest sense, it is one that is outperforming right now.
As always, if you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my ETF Trader service. As always, I am happy to answer your questions about ETFs, so do not hesitate to email me by clicking here. You just may see your question answered in a future ETF Talk.
Tags: migrated
Search