ETF Talk: Residential Real Estate Fund is on the Rise

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

With residential real estate showing signs of a budding recovery in certain markets, let’s look at one of my favorite funds in the sector, iShares FTSE NAREIT Residential Plus Capped Index ETF (REZ). REZ offers a way to invest in the recovery of the real estate market. One distinctive characteristic of REZ, compared with many other funds, is that a big chunk of its holdings include apartments.

In fact, nearly half of REZ’s holdings feature apartments, 45.05%. Other sizable portions of the fund feature self storage, 16.9%, and health-care real estate, 36.12%. With home prices in many markets still on the decline, sectors such as apartments and self storage usually do well. The health-care industry typically is fairly stable, regardless of the current economic state of the country. The fund specifically seeks investment results that correspond generally to the price yield performance, before fees and expenses, of the FTSE NAREIT All Residential Capped Index.

Below you can see the performance of the REZ share price for the past 12 months. REZ clearly seems to rebounding, after pulling back in February.

According to the National Apartment Association, renter-occupied households account for 30.6% of allU.S.households and generate more than $325 billion in annual rental revenues. With the current spread between mortgage prices and rental rates, many observers consider rental units to be more affordable than buying homes. Furthermore, Default Research, Inc. expects 1.5 million homeowners to lose their houses to foreclosure annually for the next three years. As a result, many apartment complexes around the country are filling up, and demand for apartments still is strong.

REZ’s top five holdings and their weights in the fund, as of March 13, were: Equity Residential, 11.48%; Public Storage, 10.86%; HCP Inc., 10.64%; Ventas Inc., 10.57%; and AvalonBay Communities Inc., 4.57%. At year-end 2011, the fund’s one-year performance reached 15.85%, while its three-year gain hit 22.74%.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my ETF Trader service. As always, I am happy to answer your questions about ETFs, so do not hesitate to email me by clicking here. You just may see your question answered in a future ETF Talk.

share on:
share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader

Used by financial advisors and individual investors all over the world, is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor