Real Estate ETF Comparison: RWO's Global Exposure or ICF's Domestic Conviction?
iShares charges 0.32% versus State Street's 0.5%, but State Street yields 3.5% versus 2.7%. Which trade-off wins for your portfolio?
The primary difference between iShares Select U.S. REIT ETF (ICF) and State Street SPDR Dow Jones Global Real Estate ETF (RWO) lies in their geographic focus and portfolio composition. ICF is a U.S.-centric fund with just 30 holdings, while RWO is a global fund comprising 224 holdings. The lower-cost ICF charges an expense ratio of 0.32%, whereas RWO's expense ratio is 0.5%.
This cost difference could be attractive to long-term investors, despite RWO offering a slightly higher 3.5% dividend yield compared to ICF's 2.7%. ICF's largest positions are Equinix (8.3%), Welltower (8.2%), and Prologis (8.06%), while RWO's top holdings include Welltower (10.2%), Prologis (7.9%), and Equinix (6.2%). Over the past year, ICF has paid $1.74 per share, resulting in a 2.7% yield, while RWO has paid $1.63 per share, delivering a 3.5% yield.
For investors looking for broad real estate exposure, RWO may be the preferred choice, as it offers international market exposure, with over 70% of its holdings in the U.S. and significant positions in Japan and the U.K. However, investors comfortable with higher concentration risk and seeking potentially greater returns might find ICF more appealing, as it has delivered slightly better total returns for investors over the long term.
Regardless of the choice, reinvesting dividends can enhance returns, as demonstrated by the total returns of both funds, with ICF at 11.37% and RWO at approximately 7.3% over the past five years.
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