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Proprietary Data Insights Top Real Estate ETF Searches This Month
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The Top Stocks Inside The Most-Searched Real Estate ETFs |
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We’re in the early innings of our October Housing is Haunted series. Here’s what we have done so far: We got at the heart of our nation’s housing crisis. For the record, since we published that article, the interest rate on a 30-year mortgage has soared to 7.72%. We haven’t been at this level since November, 2000. So, things continue to get worse. At least for now. Then, we looked at These Super Lucky Homeowners Are In The Best, Most Enviable Possible Positions. In that initial Juice, we said Wednesday would be— An introduction to real estate ETFs with deeper dives to follow. So, keep today’s five most searched tickers from our Trackstar database in mind because we’ll be going back to them on Wednesday. We have the same list of ETFs at the top of the newsletter today, but with updated numbers from Trackstar. So, let’s have a quick look at the key holdings in these ETFs to get an idea of the actual stocks they own. Vanguard Real Estate Index Fund (VNQ) Real Estate Select Sector SPDR Fund (XLRE) iShares U.S. Real Estate ETF (IYR) Schwab US REIT ETF (SCHH) iShares Mortgage Real Estate ETF (REM) Well, we’ll be damned. The first four ETFs on the list hold—pretty much—the same stocks and have generated near identical returns. Only REM—we have an Orange Crush on the ticker symbol—differs. We’ll explain how and why in a second in what is a key lesson for the new and timely reminder for even the most seasoned ETF investor. For as diverse and confusing as the ETF landscape can be, often when you see a list of ETFs, you’re not dealing in Strange Currencies. And, if you pick one ETF over the other, it probably won’t be The End Of the World As We Know It. Because in the case of many passive ETFs that track stock market indices, there isn’t much difference between ETFs, other than the firm, the marketing and, maybe most importantly, the expense ratio. The first four Trackstar ETFs—in order from #1 to #4—have delivered negative returns of 11.8%, 11.4%, 10.8% and 11.4% YTD. And, if you look up the actual holdings of each of these ETFs—The Juice shows you how and why to do that here—you’ll find that … These four ETFs all track indices composed of pretty much the same stocks. In fact, IYR and SCHH both use the Dow Jones Equity All REIT Capped Index as their benchmark index. XLRE uses the Real Estate Select Sector Index. VNQ aims to mimic the returns of the MSCI US Investable Market Real Estate 25/50 Index. So, by and large, these four ETFs all own the same REITs, or real estate investment trusts. What’s a REIT? The Juice has plans to answer that question in the Thursday, October 12th edition of our Housing is Haunted series. Because REITs can be an important way to invest in housing. For now, if you look at the top ten holdings of these four ETFs, you’ll see the same names pop up in—with a technical tweak here or there—the same concentrations. Let’s use SCHH’s top ten holdings alongside composition percentage to illustrate:
Check out VNQ, XLRE and IYR and you’ll find—just about across the board—the same names (all REITs) in similar compositions. The only somewhat meaningful difference among these four ETFs—expense ratios:
We have a Juice planned in the not-so-distant future to go deep on expense ratios, but they’re basically the annual management cost incurred to operate a fund. So, with VNQ’s 0.12% expense ratio, you can expect to pay $12 for every $10,000 invested. Not bad at all, though not as good as SCHH’s 0.07% expense ratio. It could come down to this metric if you’re deciding between such strikingly similar ETFs. The Bottom Line: Then there’s REM. The relative Man On The Moon as we ask, What’s The Frequency, Kenneth? on this small pile of the most-searched real estate ETFs in our Trackstar database. We’ll use REM as the opening act for a discussion Michael Stipe would be proud of—set for Wednesday, October 11th—as we get deeper into the world of housing ETFs. Even though REM is, they’re not all necessarily about REITs. But first—tomorrow’s Juice, which focuses on housing and climate change. Yep. We have interesting data—and some thoughts on that data—to share. |
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