In this post, we will compare the best Canadian REITs ETF available in Canada. First, we will discuss the benefits of owning this type of investments. Then, for each ETF, we will provide the fund’s objective, MER, holdings, historical performance and dividend distribution.
What’s a REIT
Real Estate Investment Trusts (REITs) are specialized companies that engage in owning, operating, or financing properties that generate income. These trusts have a diverse range of investments, encompassing various types of properties. This includes apartment buildings, data centers, hotels, medical facilities, offices, retail centers, cell towers, and warehouses.
While REITs can be privately held, the majority are publicly traded entities. This accessibility allows investors to easily purchase shares of real estate investment trusts on the Toronto Stock Exchange. Canadian REITs have garnered popularity for several compelling reasons.
Firstly, they provide a means of diversification in an investment portfolio. The unique nature of real estate assets typically shows a low correlation with other asset classes, making them a valuable addition. Furthermore, REITs are often seen as a natural hedge against inflation. Lastly, they offer a steady and stable source of income. The bulk of REIT revenues is derived from rent payments from tenants occupying their buildings and properties. This form of income tends to be more stable than revenues from other commercial activities, adding to the attractiveness of REITs as an investment option.
What’s an REIT ETF
It’s an exchange trader fund that invests primarily in a portfolio of REITs. The manager of the ETF can either track a REIT index, pursue an active strategy or a mix of both.
Canadian REITs ETF are great as they offer a low cost way to get exposure to large number of REITs. The holder of a REIT ETF can benefit from diversification which lowers the overall risk.
What to look for in a REIT ETF
When looking for the Best Canadian REITs ETF, please make sure to check for the criteria’s below:
- Sector allocation matters in REIT ETF. Investors should check whether the ETF invests in various sectors. The idea is to avoid REITs that are overly exposed to one type of properties. Generally speaking, a mix of industrial, retail and residential is appreciated.
- Yield distribution;
- Performance;
- Management expense ratio.
Table 1: Canadian REITs ETF list
| Name | AUM | Div yld |
| MREL – Middlefield REIT Indexplus | 109 | 6.12 |
| RIT – CI First Asset Canadian REIT | 778 | 4.24 |
| ZRE – BMO Equal Weight Reits Index | 828 | 4.20 |
| XRE – Ishares S&P TSX Capped REIT Index | 1,422 | 2.95 |
| VRE – Vanguard FTSE CDN Capped REIT Index | 338 | 3.05 |
Source: Yahoo finance
Table 2: MER Comparison and historical performance
Updated daily
| ETF | MER |
| MREL | 0.98 |
| RIT | 0.86 |
| ZRE | 0.61 |
| XRE | 0.61 |
| VRE | 0.38 |
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The performance of these ETFs shows a range of outcomes, with some experiencing growth and others witnessing declines, particularly in the short term. ZRE.TO and VRE.TO have demonstrated resilience with stronger returns, positioning them as potentially more stable choices. Conversely, RIT.TO, MREL.TO, and XRE.TO have encountered more significant obstacles, as reflected by their negative YTD returns and subdued average annual returns.
The challenges faced by these ETFs often stem from their sensitivity to interest rates and the specific nature of the assets they hold. Interest rate sensitivity is a crucial factor for REITs; as rates rise, the financing costs for properties can increase, leading to reduced profits and, consequently, lower returns for investors. This sensitivity can particularly impact ETFs like RIT.TO, MREL.TO, and XRE.TO, which have shown negative performance in the short term.
Another challenge is the lack of diversification in the types of assets held by these REITs. Some may concentrate heavily in specific types of properties or geographic locations, making them more vulnerable to sector-specific downturns or regional economic shifts. This lack of diversification can lead to increased volatility and risk, contributing to the challenges and lower returns observed in some of the ETFs. When considering investment, the broader economic environment, interest rate forecasts, and the specific asset composition of the REIT should be carefully evaluated to understand potential performance and risks.
1- VRE – Vanguard FTSE CDN Capped REIT Index ETF
VRE Seeks to track the performance of the FTSE Canada All Cap Real Estate Capped 25% Index (before fees and expenses). It provides exposure to Canadian large-, mid-, and small-cap stocks in the Real Estate industry.
Vanguard FTSE CDN Capped REIT Index ETF has the lowest MER among the ETFs selected for this post.
VRE ETF Holdings
| Holding name | % Weight |
| Canadian Apartment Properties REIT(CAR.UN) | 15.23 |
| FirstService Corp.(FSV) | 11.57 |
| RioCan REIT(REI.UN) | 10.91 |
| Allied Properties REIT(AP.UN) | 8.76 |
| Granite REIT(GRT.UN) | 7.63 |
| H&R REIT(HR.UN) | 7.29 |
| Colliers International Group Inc.(CIGI) | 6.48 |
| First Capital REIT(FCR.UN) | 6.25 |
| SmartCentres REIT(SRU.UN) | 6.18 |
| Choice Properties REIT(CHP.UN) | 6.05 |
Sector allocation
| Sector | Fund |
| Retail REITs | 23.2% |
| Office REITs | 19.6% |
| Real Estate Services | 18.1% |
| Residential REITs | 17.7% |
| Diversified REITs | 9.0% |
| Industrial REITs | 7.7% |
| Real Estate Holding and Development | 4.6% |
| Total | 100.0% |
VRE ETF Distribution
Distribution frequency: Monthly
| Adj. Amount | Ex-Div Date | Record Date | Pay Date | Declare Date |
|---|---|---|---|---|
| 0.0672 | 12/28/2023 | 12/29/2023 | 1/8/2024 | 12/20/2023 |
| 0.0672 | 11/30/2023 | 12/1/2023 | 12/8/2023 | 11/23/2023 |
| 0.0672 | 10/31/2023 | 11/1/2023 | 11/8/2023 | 10/24/2023 |
| 0.0672 | 9/28/2023 | 10/2/2023 | 10/10/2023 | 9/22/2023 |
| 0.0672 | 8/31/2023 | 9/1/2023 | 9/11/2023 | 8/24/2023 |
| 0.0672 | 7/31/2023 | 8/1/2023 | 8/9/2023 | 7/24/2023 |
| 0.0672 | 6/30/2023 | 7/4/2023 | 7/11/2023 | 6/23/2023 |
2- ZRE – BMO Equal Weight Reits Index ETF
ZRE is an index fund that tracks the Solactive Equal Weight Canada REIT Index. It invests in 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. This is the largest REITS ETF by asset under management with 1.3 Billion.
| Adj. Amount | Ex-Div Date | Record Date | Pay Date | Declare Date |
|---|---|---|---|---|
| 0.0900 | 12/27/2023 | 12/28/2023 | 1/3/2024 | 12/18/2023 |
| 0.0900 | 11/28/2023 | 11/29/2023 | 12/4/2023 | 11/21/2023 |
| 0.0900 | 10/27/2023 | 10/30/2023 | 11/2/2023 | 10/20/2023 |
| 0.0900 | 9/27/2023 | 9/28/2023 | 10/4/2023 | 9/20/2023 |
| 0.0900 | 8/29/2023 | 8/30/2023 | 9/5/2023 | 8/22/2023 |
Sector allocation
| Sector | Weight % |
| Retail | 27.87% |
| Residential | 21.94% |
| Industrial | 18.55% |
| Diversified | 13.63% |
| Office | 8.90% |
ZRE ETF Holdings
| Weight (%) | Name |
| 4.98% | WPT INDUSTRIAL REAL ESTATE INVESTMENT TRUST |
| 4.96% | SUMMIT INDUSTRIAL INCOME REIT |
| 4.76% | CROMBIE REAL ESTATE INVESTMENT TRUST |
| 4.63% | SMARTCENTRES REAL ESTATE INVESTMENT TRUST |
| 4.63% | RIOCAN REAL ESTATE INVESTMENT TRUST |
| 4.61% | INTERRENT REAL ESTATE INVESTMENT TRUST |
| 4.61% | CHARTWELL RETIREMENT RESIDENCES |
| 4.59% | MINTO APARTMENT REAL ESTATE INVESTMENT TRUST |
| 4.58% | CHOICE PROPERTIES REAL ESTATE INVESTMENT TRUST |
| 4.57% | H&R REAL ESTATE INVESTMENT TRUST |
MREL – Middlefield REIT Index plus ETF
IDR has been designed to provide investors with low-cost exposure to the global real estate sector through a combination of indexing and active portfolio management.
65% of the funds’ assets are invested in the Canadian market (34% in the United states and 2% International).
IDR ETF Holdings
TOP 10 HOLDINGS |
| Canadian Apartment Properties REIT SmartCentres Real Estate Investment Trust First Service Corp RioCan Real Estate Investment Trust Granite Real Estate Investment Trust Prologis Inc First Capital Real Estate Investment Trust Welltower Inc Colliers International Group Inc WPT Industrial Real Estate Investment Trust |
IDR ETF Sector allocation
| Name | Weight % |
| Industrial REITs | 24.4 |
| Retail REITs | 19.5 |
| Residential REITs | 18.6 |
| Real Estate Services | 7.9 |
| Specialized REITs | 6.9 |
| Healthcare REITs | 6.7 |
| Office REITs | 5.9 |
| Diversified REITs | 4.4 |
| Asset Management & Custody Banks | 2.9 |
| Hotels, Resorts & Cruise Lines | 2.8 |
RIT – CI First Asset Canadian REIT ETF
RIT is 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.
RIT ETF Distribution
| Ex-Div Date | Record Date | Pay Date | Amount |
|---|---|---|---|
| 5/24/2023 | 5/25/2023 | 5/31/2023 | 0.0675 |
| 4/21/2023 | 4/24/2023 | 4/28/2023 | 0.0675 |
| 3/24/2023 | 3/27/2023 | 3/31/2023 | 0.0675 |
| 2/21/2023 | 2/22/2023 | 2/28/2023 | 0.0675 |
| 1/24/2023 | 1/25/2023 | 1/31/2023 | 0.067 |
Sector breakdown
| Sector | Weight % |
| Residential | 30.73 |
| Industrials | 21.07 |
| Retail | 18.64 |
RIT ETF Holdings
| Name | % |
| CANADIAN APARTMENT PPTYS REIT | 4.96 |
| TRICON RESIDENTIAL INC | 4.88 |
| DREAM INDUSTRIAL REIT | 4.87 |
| SUMMIT INDUSTRIAL INCOME REIT | 4.70 |
| INTERRENT REIT | 4.68 |
| GRANITE REIT | 4.62 |
| KILLAM APT REAL ESTATE INVT TR | 4.21 |
| MINTO APARTMENT REIT | 4.06 |
| CHARTWELL RETIREMENT RESIDENCE | 4.01 |
| CHOICE PROPERTIES REIT | 3.74 |
XRE – iShares S&P/TSX Capped REIT Index ETF
Seeks to provide long-term capital growth by replicating the performance of the S&P/TSX Capped REIT Index, net of expenses.
| Ex-Div Date | Record Date | Pay Date | Amount |
|---|---|---|---|
| 5/24/2023 | 5/25/2023 | 5/31/2023 | 0.0580 |
| 4/24/2023 | 4/25/2023 | 4/28/2023 | 0.0580 |
| 3/22/2023 | 3/23/2023 | 3/31/2023 | 0.0570 |
| 2/22/2023 | 2/23/2023 | 2/28/2023 | 0.0570 |
| 1/25/2023 | 1/26/2023 | 1/31/2023 | 0.0570 |
XRE ETF Holdings
| Name | Weight % |
|---|---|
| CANADIAN APARTMENT PROPERTIES REAL | 15.27 |
| RIOCAN REAL ESTATE INVESTMENT TRUS | 10.38 |
| ALLIED PROPERTIES REAL ESTATE INVT | 8.81 |
| GRANITE REAL ESTATE INVESTMENT STA | 7.77 |
| HANDR REAL ESTATE INVESTMENT TRUST | 7.06 |
| CHOICE PROPERTIES REAL ESTATE INVE | 5.97 |
| FIRST CAPITAL REALTY REAL ESTATE I | 5.88 |
| SMARTCENTRES RL ESTATE INVESTMENT | 5.73 |
| SUMMIT INDUSTRIAL INCOME REIT UNIT | 4.01 |
| DREAM INDUSTRIAL REAL ESTATE INVES | 3.61 |
Sector allocation
| Type | Fund |
|---|---|
| Retail REIT’s | 32.24 |
| Residential REIT’s | 24.26 |
| Industrial REIT’s | 18.27 |
| Diversified REIT’s | 11.64 |
| Office REIT’s | 10.18 |
| Health Care REIT’s | 3.26 |
| Cash and/or Derivatives | 0.16 |
Disclaimer
The data on this website is for your information only. It does not constitute investment advice, or advice on tax or legal matters. Any information provided on this website does not constitute investment advice or investment recommendation nor does it constitute an offer to buy or sell or a solicitation of an offer to buy or sell shares or units in any of the investment funds or other financial instruments described on this website. Should you have any doubts about the meaning of the information provided herein, please contact your financial advisor or any other independent professional advisor.
