Recs

4

Make Money in REITs the Easy Way

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the real estate sector to improve as the global economy rebounds, the Vanguard REIT Index (NYSE: VNQ  ) ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in several dozen of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Vanguard REIT ETF's expense ratio -- its annual fee -- is an ultra-low 0.13%.

This ETF has outperformed the S&P 500 over the past one, three, and five years. Of course, as with most investments, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver. With a low turnover rate of 12%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do. It also sports an attractive 3.3% yield.

What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. General Growth Properties (NYSE: GGP  ) gained 29% over the past year and has been turning itself around. It's a major mall owner, with 37 malls in the biggest U.S. metropolitan areas. Health Care REIT (NYSE: HCN  ) , also up 29%, is a more defensive nook of the real estate market. While recessions may have people shopping at malls less often, those same customers won't cut back on health care so quickly. Macerich (NYSE: MAC  ) was one of the sector's most hated stocks last year, but it has still gained 24% in the past 12 months. (It still has doubters, since its dividend payout ratio tops 100%.)

Other companies didn't add as much to the ETF's returns in the past year, but could have an effect in the years to come. Realty Income (NYSE: O  ) gained 13%, but it entices investors with a 4.9% dividend and has paid a monthly dividend for more than 40 years. Its portfolio features more than 2,500 properties carrying long-term leases.

The big picture
Demand for health care will likely always be with us. A well-chosen ETF can grant you instant diversification across the industry -- and make investing in and profiting from the sector that much easier.

ETFs can help you find the way to better investing results. To find some great ETF investing ideas, take a look at The Motley Fool's special free report, "3 ETFs Set to Soar During the Recovery."

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. Health Care REIT is a Motley Fool Income Investor choice. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1484089, ~/Articles/ArticleHandler.aspx, 8/3/2015 5:49:35 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Selena Maranjian
TMFSelena

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

Today's Market

updated Moments ago Sponsored by:
DOW 17,598.20 -91.66 -0.52%
S&P 500 2,098.04 -5.80 -0.28%
NASD 5,115.38 -12.90 -0.25%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/3/2015 4:07 PM
GGP $27.24 Up +0.10 +0.37%
General Growth Pro… CAPS Rating: **
HCN $69.83 Up +0.46 +0.66%
Health Care REIT CAPS Rating: *****
MAC $79.03 Down -0.13 -0.16%
The Macerich Compa… CAPS Rating: **
O $48.78 Up +0.49 +1.01%
Realty Income Corp… CAPS Rating: ****
VNQ $79.44 Up +0.44 +0.56%
Vanguard REIT ETF CAPS Rating: ****

Advertisement