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.