Broader REIT Market or Lower-Cost S&P 500 Real Estate? RWR vs. XLRE

Key Points

• State Street SPDR Dow Jones REIT ETF offers a higher trailing-12-month dividend yield and a more diversified portfolio than State Street Real Estate Select Sector SPDR ETF

• State Street Real Estate Select Sector SPDR ETF maintains a lower expense ratio of 0.08% compared to 0.25% for the fund tracking the Dow Jones index

• While both funds share identical five-year beta profiles of 0.98, State Street SPDR Dow Jones REIT ETF has delivered higher total returns over the past year

The State Street SPDR Dow Jones REIT ETF (NYSEMKT:RWR) offers broader diversification and a higher yield, while the State Street Real Estate Select Sector SPDR ETF (NYSEMKT:XLRE) provides ultra-low-cost exposure to S&P 500 real estate giants.

Both funds target the U.S. real estate market but through different lenses. State Street Real Estate Select Sector SPDR ETF focuses on the narrow slice of real estate companies within the S&P 500, excluding mortgage REITs. State Street SPDR Dow Jones REIT ETF tracks a broader index of publicly traded REITs, providing more granular exposure across the industry at a slightly higher cost. This comparison looks at how these two offerings differ in depth and historical performance.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The State Street Real Estate Select Sector SPDR ETF is the more affordable option for investors with an expense ratio of 0.08%. However, those seeking a higher payout may prefer the State Street SPDR Dow Jones REIT ETF, which currently offers a slightly higher yield.

Performance & risk comparison

What’s inside

State Street SPDR Dow Jones REIT ETF (NYSEMKT:RWR) provides exposure to 99 holdings, primarily concentrated in real estate at 99%. Its largest positions include Prologis Inc (NYSE:PLD) at 10.03%, Welltower Inc (NYSE:WELL) at 9.13%, and Equinix Inc (NASDAQ:EQIX) at 4.76%. Launched in 2001, the fund has a trailing-12-month dividend of $3.73 per share. This broader basket captures mid-sized players that are often omitted from large-cap focused funds, potentially offering a more comprehensive view of the domestic REIT landscape by including a wider array of property types and market capitalizations.

In contrast, the State Street Real Estate Select Sector SPDR ETF (NYSEMKT:XLRE) is much more concentrated with 31 holdings. Its top positions include Welltower Inc (NYSE:WELL) at 9.50%, Prologis Inc (NYSE:PLD) at 9.10%, and Equinix Inc (NASDAQ:EQIX) at 7.34%. Launched in 2015, the fund has paid $1.40 per share over the trailing 12 months. Its portfolio consists of 98% real estate and 2% basic materials, mirroring the real estate sector of the S&P 500 while specifically excluding mortgage REITs to maintain a focus on equity-based property ownership. This design makes it a common tool for investors seeking pure large-cap equity REIT exposure without the distraction of smaller issues.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

Investors comparing RWR and XLRE are really deciding how broadly they want to own listed real estate. The SPDR Dow Jones REIT ETF extends beyond the real estate companies in the S&P 500, while the Real Estate Select Sector SPDR Fund offers a cheaper, narrower way to own that large-cap real estate slice.

RWR offers broader exposure to publicly traded REITs across various property types and market capitalizations, but this comes with a higher expense ratio and similar sensitivities to interest rates, financing costs, and property fundamentals. XLRE, by contrast, tracks only the S&P 500 real estate sector, providing low-cost access to large real estate companies in sectors like industrial, data center, health care, and tower REITs, while excluding many smaller and mid-sized REITs.

RWR is suited for investors seeking broader REIT exposure beyond the S&P 500 real estate sector, while XLRE serves as a targeted, low-cost option for those focused on the largest real estate companies in the S&P 500. Both funds remain sensitive to interest rates and property-cycle risks, so the decision really depends on whether broader or more focused exposure aligns with your goals.

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Eric Trie has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.