Your Guide to Picking the Right REIT ETF: A Complete Selection Overview

The real estate investment trust (REIT) sector has faced considerable headwinds throughout the current market cycle, primarily due to the monetary tightening environment. While the Federal Reserve’s rate hike campaign has pressured valuations across this asset class, recent market movements suggest that much of the downside may already be reflected in REIT ETF prices. Understanding which funds deserve a spot in your portfolio requires examining several top performers and understanding what each brings to the table.

The REIT ETF Landscape: A Market Correction Creates Opportunity

The broader REIT ETF market has experienced a notable divergence from major equity indices. The Vanguard Real Estate ETF (VNQ), which stands as the largest REIT-focused exchange-traded fund in the U.S., has underperformed the S&P 500 by approximately 700 basis points on a year-to-date basis. However, this weakness masks an important reversal: over the past 90 days, VNQ has gained 5.60%, suggesting market participants may be repricing the duration risk that once plagued REIT ETFs.

This correction creates a compelling backdrop for investors building a REIT ETF list of quality holdings across different subsectors and strategies.

Short-Duration Exposure for Rate-Sensitive Markets

For those concerned about continued monetary tightening, the Nushares Short-Term REIT ETF (NURE) offers a defensive positioning strategy. With an expense ratio of just 0.35% annually, NURE focuses on properties with shorter lease cycles—apartments, hotels, self-storage, and manufactured homes—which experience less duration sensitivity than traditional office or retail REITs.

The fund’s year-to-date performance of nearly 7% demonstrates the wisdom of this approach. NURE delivers this protection without sacrificing yield, boasting a 30-day SEC distribution rate exceeding 3%, making it an attractive option for income-focused investors navigating a rising-rate environment.

Equal-Weight Tilts and Mid-Cap Opportunities

The Invesco S&P 500 Equal Weight Real Estate ETF (EWRE) takes a contrarian approach by eschewing traditional cap-weighting in favor of equal-weight methodology. This structure creates meaningful exposure to mid-cap operators—approximately 59% of holdings fall into this category—while maintaining a portfolio average market capitalization of $20.56 billion across 32 positions.

Despite posting just 1.72% year-to-date returns, EWRE gained 5.62% during the third quarter, signaling growing investor interest in value-oriented REIT strategies.

Tech-Driven Real Estate: Industrial and Data Center Focus

Investors seeking exposure to the intersection of real estate and digital infrastructure should examine the Pacer Benchmark Industrial Real Estate SCTR ETF (INDS). This recently launched vehicle targets cell tower REITs, data center operators, and related infrastructure plays positioned to benefit from e-commerce expansion and 5G deployment.

While INDS is too new to evaluate on a full-cycle basis, its 4.24% gain since inception suggests strong institutional interest in the industrial REIT subsector.

Ultra-Low-Cost Core Holdings

Cost-conscious investors gravitate toward the Schwab U.S. REIT ETF (SCHH), which carries an industry-leading expense ratio of just 0.07% annually. Holding $4.8 billion in assets, SCHH provides vanilla exposure to the Dow Jones U.S. Select REIT Index with balanced positioning: roughly 40% in residential and retail, with office and specialized REITs comprising 28.50% of the mix.

A trailing 12-month distribution yield of 2.64% adds to its appeal for core portfolio allocations. Industry observers note that office REITs may face consolidation pressure as rising financing costs attract opportunistic capital.

New Entrants with Institutional Backing

The JPMorgan BetaBuilders MSCI US REIT ETF (BBRE) represents JPMorgan Asset Management’s dedicated entry into the REIT ETF arena. Having accumulated $60.35 million in assets within three months of launch, BBRE tracks the MSCI U.S. REIT Index through 154 holdings.

With an expense ratio of 0.11%, BBRE offers competitive pricing while providing diversified exposure across retail, residential, and office subsectors.

Active Management for Selective Opportunities

The Invesco Active U.S. Real Estate ETF (PSR) demonstrates that active management can add value in real estate markets. Charging 0.35% annually—considerably less than actively managed mutual fund alternatives—PSR employs quantitative selection methodology to identify attractively valued securities while managing portfolio risk.

Holding 70 REITs with an average market capitalization of $21.54 billion, PSR boasts four-star Morningstar recognition and has appreciated 11.41% over the past six months.

International Diversification: European REIT Exposure

For investors comfortable with currency and geopolitical risks, the iShares Europe Developed Real Estate ETF (IFEU) offers compelling valuation opportunities. Trading at more modest multiples than U.S. peers while down less than 1% year-to-date—compared to a 5.10% decline for the S&P Europe 350—IFEU provides access to 103 European REITs across developed markets.

With significant concentration in U.K. and German properties, IFEU yields an attractive 4.17%, roughly 60 basis points above the Dow Jones U.S. Real Estate Index, appealing to value-oriented income seekers with extended investment horizons.

Building Your REIT ETF List: Key Takeaways

Constructing a diversified REIT ETF list requires balancing cost efficiency, duration exposure, subsector concentration, and yield generation. Whether through low-cost passive vehicles like SCHH, rate-sensitive strategies via NURE, or active selection through PSR, today’s REIT ETF marketplace offers multiple pathways to real estate exposure. Recent performance suggests the sector’s correction may have created durable entry points for patient capital.