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Is The Rebound In Real Estate ETFs Here To Stay?

April 2nd, 2010

“In mid-2009 we asked whether real estate investment trust ETFs had priced in a predicted tidal wave of commercial real estate foreclosures. We concluded prices had fallen so far they could well be at fair market value. Those prices were fair indeed. REITs have nearly doubled in the past year. How did they do it? On the one hand, investors flocked to their steady dividends which compare favorably to anemic bond yields. On the other hand, REITs were able to shed problem properties and grab properties at distressed prices, heightening their appeal,” Will McClatchy Reports From ETFzone.

McClatchy goes on to say, “The funds below are iShares Cohen & Steers Realty Majors ETF (NYSEArca:ICF) at 0.35% fees and iShares Dow Jones US Real Estate ETF (NYSEArca: IYR) at 0.48% Vanguard REIT ETF (AMEX:VNQ) with a phenomenal 0.12% annual expense ratio. Major broad market REITs all gained ground.”

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“Despite stellar recent returns, economic fundamentals for the industry remain precarious. According to a report by the Congressional Oversight Panel, commercial property values have fallen 40 percent on average since 2007. Over $1.4 trillion in commercial loans will come up for refinancing by 2014, and nearly half of those are underwater, according to the report. Vacancy rates range from eight percent for multifamily housing to 18 percent for office buildings. Owners have scrambled to fill space by dropping rents 40 percent for office space and 33 percent for retail space. Wall St. creations could fare the worst. Deutsche Bank estimates that two thirds of commercial mortgage-backed securities will fail to roll over in the next few years,” McClatchy Reports.

See The Full Story: HERE

Here are some details on the REIT ETFs below:

The iShares Cohen & Steers Realty Majors Index Fund ETF (ICF) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of large, actively traded U.S. real estate investment trusts, as represented by the Cohen & Steers Realty Majors Index.

Top Daily Holdings*
as of 4/1/2010
View all holdings
SIMON PROPERTY GROUP INC (SPG) 7.87%
PUBLIC STORAGE (PSA) 7.55%
VORNADO REALTY TRUST (VNO) 7.16%
EQUITY RESIDENTIAL (EQR) 6.51%
BOSTON PROPERTIES INC  (BXP) 6.31%
HCP INC (HCP) 5.82%
HOST HOTELS&RESORTS INC  (HST) 5.63%
VENTAS INC (VTR) 4.47%
AVALONBAY COMMUNITIES INC (AVB) 4.21%
PROLOGIS (PLD) 3.83%
Total 59.35%
*Holdings are subject to change.

Chart for iShares Cohen & Steers Realty Majors (ICF)

The iShares Dow Jones U.S. Real Estate Index Fund ETF (IYR) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, to the performance of the real estate sector of the U.S. equity market, as represented by the Dow Jones U.S. Real Estate Index.

Top Daily Holdings*
as of 4/1/2010
View all holdings
SIMON PROPERTY GROUP INC (SPG) 8.66%
VORNADO REALTY TRUST (VNO) 4.92%
PUBLIC STORAGE (PSA) 4.27%
EQUITY RESIDENTIAL (EQR) 3.85%
BOSTON PROPERTIES INC  (BXP) 3.76%
HCP INC (HCP) 3.48%
ANNALY CAPITAL MANAGEMENT IN (NLY) 3.45%
HOST HOTELS&RESORTS INC  (HST) 3.36%
VENTAS INC (VTR) 2.67%
AVALONBAY COMMUNITIES INC (AVB) 2.51%
Total 40.94%
*Holdings are subject to change.

Chart for iShares Dow Jones US Real Estate (IYR)

The Fund ETF (VNQ) seeks to provide a high level of income and moderate long-term capital appreciation by tracking the performance of a benchmark index that measures the performance of publicly traded equity REITs.

Month End Ten Largest Holdings as of 02/28/2010  

Rank Holding
1 Simon Property Group Inc. (SPG)
2 Vornado Realty Trust (VNO)
3 Public Storage (PSA)
4 Equity Residential (EQR)
5 Boston Properties Inc. (BXP)
6 HCP Inc. (HCP)
7 Host Hotels & Resorts Inc. (HST)
8 Ventas Inc. (VTR)
9 AvalonBay Communities Inc. (AVB)
10 ProLogis (PLD)
Ten largest holdings = 43.1% of total net assets

Chart for Vanguard REIT Index ETF (VNQ)


NYSE:ICF, NYSE:IYR, NYSE:VNQ


 

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