REITs Hold Up Better Than Stocks

While stocks have faded back to January levels, real estate investment trusts or REITs are still up for the year.

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The Vanguard REIT ETF (VNQ) is up over 5% in 2011 while the performance of the S&P 500 has been nearly flat.

REITs have enjoyed a steady recovery since the peak of the financial crisis and have outperformed stocks on a total return basis. Investors are betting that as unemployment levels recede, profits for commercial landlords will rise as vacancies in office buildings, apartments and shopping malls decline.

REITs have also benefited as the continued decline in housing prices has driven higher demand for rental housing. In addition, some investors are attracted to the higher dividends that REITs pay out.

VNQ’s top holdings include Simon Property GroupEquity ResidentialPublic Storage and Vornado Realty Trust.

The ETF’s expense ratio is 0.12% and the fund currently yields 2.29% excluding capital gains and return of capital.

Read more on investing in REITs with ETFs.

– ETF MarketPro Staff
June 20, 2011