Sector Transition may Already be Baked Into REITs, ETFs

Real estate investment trusts and sector-related exchange traded funds have been among the most popular investments in an extended low-rate environment. However, after this year’s run, REITs may be starting to look pricey.

The Vanguard REIT ETF (NYSEArca: VNQ) is the eighth most popular ETF of 2016, adding $4.6 billion in net inflows year-to-date, according to

SEE MORE: Preparing for Big Changes to a Popular Financial ETF

Another catalyst driving real estate stocks and exchange traded funds higher this year is the group’s transition to the eleventh sector at the end of this month. That announcement was made in 2014 by index providers S&P and MSCI, so markets have had ample time to absorb real estate departing financial services to become its own sector.

Ohave pointed out that the REITs sector could gain momentum ahead as Real Estate will separate from Financials to become its own S&P 500 sector, which could help the new REITs sector attract greater inflows from underweight money managers.


The S&P Dow Jones Indices stated it would add an 11th sector to its Global Industry Classification Standard, creating a new Real Estate Sector from the Financial Sector. The changes to the S&P 500 index will be implemented after the close of business on September 16, 2016.

SEE MORE: Popular Plays for REIT ETFs Ahead of Sector Reclassification