REIT Winners And Losers: January's Trends Reshaping 2025

Real estate investment trusts (REITs) posted modest gains to begin 2025. According to Nareit data, the FTSE Nareit All Equity REITs Index rose 1.0% in January. However, the broader stock market outperformed, with the Russell 1000 gaining 3.2% and the Dow Jones U.S. Total Stock Market rising 3.1%.

While REITs stood strong, investors are weighing the impact of interest rates, sector performance, and income potential when considering REIT-focused ETFs. Here are three ETFs that have performed well in the past year:

iShares Residential and Multisector Real Estate ETF REZ

This ETF’s price returns in the past year have been around 21.94%. The fund’s holding contains a few of the strongest names in the real estate industry. Welltower WELL occupies the biggest chunk of the ETF’s total assets. The expense ratio is 0.48%. The ETF offers significant exposure to Healthcare REITs, which was among the best-performing REITs in January, per Nareit.

Vanguard Real Estate ETF VNQ

This fund’s price has grown 9.41% in the past year. It tracks the MSCI US Investable Market Real Estate 25/50 Index and carries an expense ratio of 0.13%. The ETF provides double-digit exposure to Data Center REITs, Healthcare REITs, Industrial REITs, Retail REITs, and Telecom REITs. Healthcare REITs and Industrial REITs were among the best-performing in January.

This apart, the ETF is also exposed to Diversified REITs, Hotel & Resorts REITs, Multi-Family Residential REITs, Office REITs, and others. Companies like Equinix EQIX, American Tower Corp. AMT, and Welltower adorn the portfolio.

Also Read: Thornburg’s New Bond ETF Launches: A Peek Into TPLS And TMB

Invesco S&P 500 Equal Weight Real Estate ETF RSPR

The ETF tracks the S&P 500 Real Estate Index and its price has returned 14.45% in the past year. The expense ratio it carries is 0.4%. Stocks of Boston Properties Inc BXP, American Tower and Vici Properties Inc VICI are among this fund’s holdings.

Dividend Appeal

Despite recent volatility, REITs continue to offer compelling dividend yields, making them attractive for income-focused investors. According to the Nareit report, as of Jan. 31, the FTSE Nareit All Equity REITs Index carried a dividend yield of 3.93%, while the Mortgage REITs Index yielded a hefty 12.05%. By comparison, the S&P 500’s dividend yield stood at just 1.19%.

Winners And Laggards

A closer look at January’s sector performance reveals diverging trends within the REIT space. The best-performing property sectors were:

• Industrial REITs: up 11.1%
• Timberland REITs: up 8.1%
• Health care REITs: up 4.2%

Mortgage REITs performed well in January, with the FTSE Nareit Mortgage REITs Index rising 5.4%. Home financing REITs also had a great January, posting an 8.4% gain, while commercial financing REITs edged up 0.2%.

Meanwhile, the weakest segments were:

• Data center REITs: down 4.9%
• Lodging/resorts REITs: down 2.7%
• Specialty REITs: down 1.1%

ETF investors may find opportunities in targeted exposure to high-performing REIT segments while maintaining a diversified approach to balance risk and reward.

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