ETF Spotlight: SPDR Dow Jones REIT (RWR)

ETF Spotlight on SPDR Dow Jones REIT (NYSEArca: RWR), part of a weekly series.

Assets: $1 billion

Objective: RWR seeks to track the Dow Jones U.S. Select REIT Index.

Holdings: RWR’s index is made up of companies whose charters are the equity ownership and operation of commercial real estate. Each REIT in the index is weighted by its float-adjusted market capitalization, according to State Street’s fact sheet on the fund. The top companies in the fund are Simon Property Group (NYSE: SPG) and Public Storage (NYSE: PSA).

What’s Good

• This ETF delivers diverse exposure to the real estate investment trust (REIT) market, holding a mix of apartments (15.2%), health care (14%), regional malls (13%), office space (12.4%) and more.
• This fund was down 41.5% in 2008, but since the market’s low on March 9, it has climbed more than 105%.
• RWR’s expense ratio is 0.25%.

The Latest News

• The IRS recently came out with new rules that would simplify commercial real estate loan refinancing in order to stem the tide of defaults
• These new rules would allow these loans to be refinanced without setting off tax penalties for investors
• Anton Troianovski for The Wall Street Journal reports that the recovery environment could reflect the 1990s, when many real-estate developers went public to avoid bankruptcy and helped turn real-estate investment trusts into a major force in the property market
• The sector has a heavy debt load, but if REITs can roll it over, the shares may not suffer
• REITs already have rallied about 90% from the 18-year low they hit in March as the drop-off in home prices and economic conditions has slowed, reports Donna Kardos Yesalavich for The Wall Street Journal