One Way to Invest in Rising U.S. Apartment Rental Prices

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August 25, 2016 11:45am NYSE:REZ

With rents continuing to rise across the country, investors seeking residential real estate exposure can look to the iShares FTSE NAREIT Residential Index Fund ETF (NYSE:REZ).


Launched in May 2007 — just before the housing crisis — REZ has managed to gather about $468 million in assets. The fund is also fairly liquid, with an average three-month rolling volume of 74,676 shares traded per day.

From the fund literature, REZ “…seeks to track the investment results of an index composed of U.S. residential, healthcare and self-storage real estate equities.” While not a pure residential real estate play, the fund offers the highest exposure to the rental market out of any comparable ETF we could find.

Looking deeper into the holdings, we see that many of REZ’s largest holdings do in fact concentrate their businesses in residential real estate. VTR, AVB, EQR, and ESS all have large residential portfolios:

REZ Top 10 Holdings
REZ-holdings

With a yield around 3.78% and a reasonable expense ratio of 0.48%, REZ deserves serious consideration for investors looking to capitalize on rising rents, while still having a bit of a hedge in the form of public storage and medical facilities.

REZ-2016-08-25

REZ shares rose $0.83 (+1.26%) to $66.75 per share in Thursday morning trading. REZ has now gained 5.2% since the start of 2016, compared with a 7% rise in the benchmark S&P 500 index in the same period.


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