REITs are securities that trade like a stock and invest in real estate directly through property ownership or mortgages. Consequently, revenue are mainly generated through rents or interest on mortgage loans. To qualify for special tax considerations, the asset also distributes the majority of income, about 90% of taxable profits, to investors as dividends. KBWY’s commercial real estate exposure could benefit investors going forward.
Not only is VNQ the largest REIT ETF, it is also the largest sector ETF of any variety.
VNQ is popular with income investors due in part to its low fee. The ETF charges 0.12% per year, or $12 on a $10,000 investment, making it less expensive than 90% of rival funds.
For more information on real estate investment trusts, visit our REITs category.