Will REIT ETFs Reverse August’s Big Slump?

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September 5, 2016 12:35pm NYSE:ICF NYSE:REM

The REIT sector pulled back 3.28% last month, trailing the S&P 500’s flat performance. With Fed rate hike worries now behind us, can REIT ETFs stem the tide in September?


First, let’s take a look at the August returns of the top ten real estate ETFs by assets.

REIT ETFs – August 2016 Performance

Sym ETF Name Price % Change AUM
VNQ Vanguard REIT ETF 88.97 -3.97% 35.34B
IYR iShares Dow Jones US Real Estate Index Fund 82.54 -3.69% 5.05B
ICF iShares Cohen & Steers Realty Majors Index Fund 107.46 -4.31% 4.24B
RWR SPDR Dow Jones REIT ETF 100.22 -3.64% 3.89B
SCHH Schwab U.S. REIT ETF 43.77 -3.72% 2.85B
REM iShares FTSE NAREIT Mortgage REITs Index Fund 10.74 0.66% 1.23B
REZ iShares FTSE NAREIT Residential Index Fund 66.2 -3.89% 470.30M
FRI First Trust S&P REIT Index Fund 24.76 -4.11% 376.52M
KBWY PowerShares KBW Premium Yield Equity REIT Portfolio 37.5 -1.26% 273.35M
FREL MSCI Real Estate Index ETF 24.99 -3.70% 206.00M

Prices and returns current as of Sep 5, 2016. % Change represents total return, including dividends.

As you can see, REM was the only REIT ETF with over $200 million in assets that closed positive for the month. That’s because REM invests in Mortgage REITs, which continue to thrive in a low interest rate environment.

On the negative side of things, ICF was the worst performer of the group, hit badly by the August downturn in many of its largest holdings. SPG, which is ICF’s largest holding and represents about 8% of its portfolio, fell 5% last month. PSA, its second largest holding, fell over 6% for the month.

There is plenty of hop on the horizon for the real estate sector, however. Investors love chasing yield these days, which is bound to keep REITs in focus. Last Friday’s weaker than expected payrolls number also nixed any hope for a September interest rate hike, which spurred buying in real estate stocks during the first trading day of September.

So while REIT ETFs looked shaky in August, there’s no reason the sector can’t make back all those losses — and then some — in the months ahead.


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