ICF vs. XLRE: Real Estate ETFs That Can Build Up Your Portfolio

Both the State Street Real Estate Select Sector SPDR ETF (NYSEMKT:XLRE) and iShares Select US REIT ETF (NYSEMKT:ICF) people U.S. existent property concern trusts (REITs), providing diversified entree to the existent property sector. Investors comparing these 2 whitethorn privation to see the cost, yield, and semipermanent performance, arsenic their holdings and assemblage tilts grounds notable overlap.

*Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year play returns. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months.

XLRE charges conscionable 0.08% successful expenses compared to ICF’s 0.32%, portion besides offering a higher dividend yield.

ICF holds 34 U.S. REITs, with a superior absorption connected equity REITs and nary vulnerability to owe REITs oregon existent property stocks. Its largest positions see Prologis (NYSE:PLD), Welltower (NYSE:WELL), and American Tower (NYSE:AMT), which collectively marque up astir 25% of the fund. With a money property of astir 25 years, ICF offers a agelong show way record.

XLRE is likewise concentrated, holding 34 assets successful the existent property sector. However, the holdings don't conscionable see REITs, but besides stocks of companies from the S&P 500 that are progressive successful existent estate. The much diversified holdings wrong XLRE are mostly wherefore the ETF has a higher AUM than ICF, contempt being astir for 14 less years.

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Although XLRE has a higher dividend yield, a importantly little disbursal ratio, and broader existent property vulnerability than ICF, investors should beryllium cautious of its existent payout ratio. The payout ratio reflects the percent of a company's oregon ETF's net that are distributed arsenic dividends. Payout ratios tin alteration widely, but since REITs are required to administer 90% of their taxable income arsenic dividends, it's communal for existent property ETFs to person payout ratios adjacent that level. However, erstwhile payout ratios scope supra 100%, that's erstwhile it tin go alarming.