However, some market participants believe active managers are already positioned for real estate becoming its own sector, which could keep a lid on the impact the transition will have on ETFs such as VNQ.

“Stifel’s Matthew Heinz uses data from (Stifel owned) Keefe Bruyette Woods‘ Melissa Robert which shows actively managed portfolios are already accounting for the change, holding a 3.91% aggregate position in real estate at the end of the second quarter, an 80 basis point increase in active REIT allocations in the past year,” reports Teresa Rivas for Barron’s.

Still, some large-cap managers, by some estimates as many as half, have no exposure to REITs. If they have not already done so, those managers will need to buy real estate stocks soon, assuming they benchmark to S&P or MSCI indexes.

In addition to VNQ, the SPDR Dow Jones REIT ETF (NYSEArca: RWR) and iShares Dow Jones US Real Estate Index Fund (NYSEArca: IYR) are among the most popular REIT ETF plays.

For more information on real estate investment trusts, visit our REITs category.

Vanguard REIT ETF