A Real Estate Investment Trust (REIT) is an investment trust that specializes in real estate related investments including mortgages, construction loans, land and real estate securities in varying combinations. REITs allow individual investors to pool their money to purchase large, diversified portfolios of real estate assets such as apartment buildings, hotels, office buildings and retail centres.
What is the Best REIT ETFs in Canada?
- MREL.TO: Middlefield Real Estate Dividend ETF
- ZRE.TO: BMO Equal Weight REITs Index ETF
- PHR.TO: Purpose Real Estate Income Fund
- RIT.TO: CI Canadian REIT ETF
- VRE.TO: Vanguard FTSE Canadian Capped REIT Index ETF
- XRE.TO: iShares S&P/TSX Capped REIT Index ETF
- CGR.TO: iShares Global Real Estate Index ETF
- HGR.TO: Harvest Global REIT Leaders Income ETF
- HCRE.TO: Horizons Equal Weight Canada REIT Index ETF
- TGRE.TO: TD Active Global Real Estate Equity ETF
| ETF | CGR | XRE | ZRE | RIT | HGR | HCRE | MREL | PHR | TGRE | VRE |
| Inception | 2008-08-26 | 2002-10-17 | 2010-05-19 | 2004-11-15 | 2017-06-14 | 2019-01-22 | 2011-04-20 | 2014-04-29 | 2019-11-26 | 2012-11-02 |
| MER | 0.72% | 0.61% | 0.61% | 0.87% | 0.99% | 0.33% | 1.05% | 0.79% | 0.73% | 0.40% |
| AUM | $204,676,831 | $1,016,456,089 | $581,330,000 | $501,750,000 | $12,910,000 | $47,303,409 | $105,943,772 | $22,600,000 | $72,000,000 | $284,100,000 |
| Yield | 2.66% | 4.60% | 5.13% | 5.15% | 9.02% | 6.26% | 7.5% | 4.59% | 3.35% | 2.65% |
| Distributions | Quarterly | Monthly | Monthly | Monthly | Monthly | N/A | Monthly | Monthly | Monthly | Monthly |
| 1Y | 7.58% | 1.91% | 0.92% | 5.38% | 3.98% | 0.93% | 7.85% | 4.76% | 8.67% | 9.25% |
| 3Y | 2.78% | 4.14% | 3.63% | 3.91% | -3.88% | 3.80% | 4.50% | 4.14% | 1.56% | 4.63% |
| 5Y | 2.48% | 3.55% | 5.27% | 5.13% | 0.13% | N/A | 5.83% | 5.18% | N/A | 4.02% |
| 10Y | 5.75% | 5.25% | 6.29% | 8.38% | N/A | N/A | 7.15% | N/A | N/A | 5.76% |
| 15Y | 7.48% | 9.83% | N/A | 13.22% | N/A | N/A | N/A | N/A | N/A | N/A |
10. TD Active Global Real Estate Equity ETF
TD Active Global Real Estate Equity ETF seeks to provide regular income and achieve long-term capital appreciation by investing in, or gaining exposure to, the equity or equity-type securities of real estate investment trusts (REITs) and companies that invest or operate primarily in the real estate sector located anywhere in the world.
9. Horizons Equal Weight Canada REIT Index ETF
HCRE seeks to replicate, to the extent possible, the performance of the Solactive Equal Weight Canada REIT Index (Total Return), net of expenses. The Solactive Equal Weight Canada REIT Index (Total Return) is an equal weight index of Canadian-listed real estate investment trust equity securities.
8. Harvest Global REIT Leaders Income ETF
Harvest Global REIT Leaders Income ETF is an actively managed portfolio of large-cap REIT companies in key developed markets, to provide access for Canadians to a variety of Global REITS. The ETF is designed to provide a consistent monthly income stream with an opportunity for growth. In order to generate an enhanced monthly distribution yield, an active covered call strategy is engaged.
- Global REITs portfolio with attractive monthly income
- Exposure to growth sectors; healthcare, technology, logistics
- Diversified: Portfolio of large capitalization global REIT leaders
- Attractive monthly income with opportunity for capital appreciation
- Covered call strategy used to enhance portfolio income potential and lower portfolio volatility
- Currency Availability: Hedged
7. iShares Global Real Estate Index ETF
The ETF has been designed to replicate, to the extent possible, the performance of the Cohen & Steers Global Realty Majors Index, net of expenses. Under normal market conditions, the ETF will primarily invest in securities of one or more exchange traded funds managed by BlackRock or an affiliate and/or equity securities issued by international issuers participating in the real estate sector. The Index consists of equity securities from the global real estate universe that the index provider believes are likely to lead and/or most benefit from the securitization of real estate.
- Exposure to a portfolio of publicly-traded global real estate companies
- Can be used to diversify your portfolio and express a global sector view
6. iShares S&P/TSX Capped REIT Index ETF
The ETF seeks to provide long-term capital growth by replicating, to the extent possible, the performance of the S&P/TSX Capped REIT Index. Under normal market conditions, the ETF will primarily invest in equity securities issued by Canadian small-capitalization issuers and Canadian real estate investment trust issuers. The Index is comprised of constituents of the S&P/TSX Composite Index that are assigned to the following GICS Industry: Equity REITs (6010). Individual constituents are capped at 25% weight.
- Exposure to Canadian Real Estate Income Trusts (REITs)
- Exposure to different types of REITs in a single fund, such as the retail, residential, office and industrial
- Receive monthly distributions
5. Vanguard FTSE Canadian Capped REIT Index ETF
Vanguard FTSE Canadian Capped REIT Index ETF seeks to track, to the extent reasonably possible and before fees and expenses, the performance of a broad Canadian real estate equity index that measures the investment return of publicly traded securities in the Canadian real estate sector. Currently, this Vanguard ETF seeks to track the FTSE Canada All Cap Real Estate Capped 25% Index (or any successor thereto). It invests primarily in stocks of companies in the Canadian real estate sector.
- Seeks to track the performance of the FTSE Canada All Cap Real Estate Capped 25% Index to the extent possible and before fees and expenses.
- Employs a passively managed, full-replicated index strategy to provide exposure of Canadian large-, mid-, and small-cap stocks in the Real Estate industry.
- Uses efficient, cost effective index management techniques.
4. CI Canadian REIT ETF
The Fund’s investment objective is to seek long-term total returns consisting of regular income and long-term capital appreciation from an actively managed portfolio comprised primarily of securities of Canadian real estate investment trusts, real estate operating corporations and entities involved in real estate related services. Up to 30% of the Fund’s assets may be invested in foreign securities.
- want Canadian equity exposure to real estate related companies
- want the potential for high income generation
- want to receive regular monthly cash flows (if any)
- can tolerate medium risk
3. Purpose Real Estate Income Fund
A diversifying source of income and growth linked to a broad portfolio of high-quality real estate assets.
- Security selection and portfolio construction driven by a combination of macro, fundamental and technical factors
- Focus on high-growth sub-sectors and avoidance of sunset industries
- Select REITs with solid growth, strong balance sheets, low debt and sustainable payout ratios
- Emphasis on honest and experienced management teams with well-defined plans to manage, finance and execute projects
2. BMO Equal Weight REITs Index ETF
The BMO Equal Weight REITs Index ETF has been designed to replicate, to the extent possible, the performance of the Solactive Equal Weight Canada REIT Index, net of expenses. The Fund invests in Canadian real estate investment trusts. The Fund invests in and holds the Constituent Securities of the Index in the same proportion as they are reflected in the Index.
The Solactive Equal Weight Canada REIT Index consists of the Canadian securities that fall within the Real Estate Investment Trust sector. Each security in the Index is allocated a fixed weight rather than a market capitalization weight. To be included as a Constituent Security, an issue must meet certain minimum trading volume requirements and be incorporated in, or has its primary market listing in Canada.
1. Middlefield Real Estate Dividend ETF
Middlefield Real Estate Dividend ETF is an actively managed, diversified fund designed to provide investors with low-cost exposure to the global real estate sector.
- an award-winning fund with leading long-term performance and tax-efficient monthly distributions
- a high conviction, diversified portfolio of commercial real estate companies operating in the industrial, data centre, retail, healthcare, cell tower, office and residential sectors
- real estate performs well in both low and rising interest rate cycles and is also a proven hedge against inflation
Is a REIT ETF Worth It?
REIT ETFs offer reliable income and the possibility of substantial capital growth. Comparable to stocks or mutual funds, investors can easily trade shares of REIT ETFs on major exchanges. The advantages of owning income-generating real estate are widely recognized.
Is There a Downside to Investing in REITs?
Although there are numerous advantages to investing in REITs, it’s crucial to acknowledge that potential risks exist if not approached with a well-thought-out strategy. Factors such as market fluctuations, changes in interest rates, and the possibility of declines in property values can influence the performance of REITs.
Can a REIT Lose Money?
A rise in short-term interest rates directly impacts profits, and in the given example, a doubling of rates would eliminate any profit. Furthermore, if rates increase even further, the REIT incurs losses. This high sensitivity makes mortgage REITs exceptionally volatile, and their dividend payouts become highly unpredictable.
