For investors who want real estate exposure without picking individual REITs, a REIT ETF is one of the most accessible entry points available. A REIT ETF is an exchange-traded fund that holds a basket of many REITs in a single, low-cost, exchange-listed security — so buying one share gives you instant diversification across dozens or hundreds of real estate companies, with the ability to trade throughout the day like a stock. Some REIT ETFs track the broad REIT market, while others focus on specific sectors such as residential, industrial, or mortgage REITs. The key factors in choosing one are the expense ratio (lower is generally better), the yield, the holdings and index it tracks, and its size and tracking quality. This guide explains what a REIT ETF is, broad versus sector ETFs, how to compare expense ratios and yield, the liquidity advantages, and how to choose a REIT ETF. Note that this is educational information, not investment advice, and we make no specific fund recommendations — yields are never promised, past performance doesn't guarantee future results, and you should verify the current details with your advisor.
What a REIT ETF Is
A REIT ETF is an exchange-traded fund that holds a basket of REITs in a single security. Rather than buying shares of one Real Estate Investment Trust at a time, you buy one share of the ETF, and that share represents a proportional slice of all the REITs the fund holds. The fund pools investor money, invests it across many REITs (usually to track a published real estate index), and trades on a stock exchange — so it combines the diversification of a fund with the tradability of a stock.
Because a REIT ETF holds many REITs at once, a single purchase gives you instant diversification across dozens or even hundreds of real estate companies, spanning multiple property sectors and markets. The ETF passes through the dividends its underlying REITs pay (typically distributed to ETF shareholders quarterly), and it charges a small annual fee — the expense ratio — for managing the portfolio. This structure makes a REIT ETF an accessible, low-cost, low-minimum way to add broad real estate exposure to a portfolio without researching and buying individual REITs.
So a REIT ETF is a basket of REITs wrapped in a single, exchange-traded, diversified, low-cost security — an accessible entry point to real estate investing. A REIT ETF — an exchange-traded fund that holds a basket of many REITs in one share, usually tracking a real estate index, trading on an exchange like a stock, passing through the underlying REITs' dividends, and charging a modest expense ratio — gives investors instant diversification and easy access to real estate. It combines fund diversification with stock-like tradability. Understanding what it is frames everything else. A REIT ETF is an exchange-traded fund holding a basket of REITs in one share, giving instant diversification, intraday liquidity, and low-cost access to real estate without picking individual REITs.
Broad vs. Sector ETFs
REIT ETFs come in two broad varieties, distinguished by how widely they invest. A broad REIT ETF tracks the total REIT market — holding REITs across all the major property sectors (residential, industrial, retail, office, healthcare, data centers, self-storage, and more) in proportions that mirror a broad real estate index. This gives you one-stop, diversified exposure to U.S. (or global) real estate as an asset class, without taking a view on any single sector.
A sector-specific REIT ETF, by contrast, concentrates in one slice of the market — for example, a residential REIT ETF, an industrial REIT ETF, or a mortgage REIT ETF. These let you target a particular real estate theme you find attractive (say, the demand drivers behind industrial logistics, or the higher yields of mortgage REITs), but they're less diversified and more exposed to the fortunes of that single sector. A mortgage REIT ETF, for instance, carries the interest-rate sensitivity characteristic of mortgage REITs.
So the choice is between broad diversification (the total REIT market) and targeted exposure (a single sector) — each with a different diversification-and-risk profile. So understanding the distinction helps you pick the right tool. Broad vs. sector ETFs — broad REIT ETFs tracking the total REIT market across all sectors for one-stop diversification, versus sector-specific REIT ETFs (residential, industrial, mortgage, and so on) concentrating in a single slice for targeted exposure but with less diversification and more sector risk — is a key decision when selecting a REIT ETF. Broad ETFs diversify; sector ETFs target. Understanding the distinction frames the choice. REIT ETFs are either broad (tracking the total REIT market across all sectors for diversification) or sector-specific (residential, industrial, mortgage, etc., for targeted exposure with less diversification and more concentration risk).
A broad REIT ETF buys you the whole real estate market in one click; a sector ETF lets you make a more pointed bet — and accept the more concentrated risk that comes with it.
Expense Ratios & Yield
Two of the most important numbers to compare across REIT ETFs are the expense ratio and the yield. The expense ratio is the annual fee the fund charges, expressed as a percentage of assets — it's deducted from returns automatically, so a lower expense ratio means more of the fund's return stays in your pocket. Because broad REIT index ETFs are passively managed and competition has driven costs down, expense ratios on many REIT ETFs are quite low; comparing them is a straightforward way to favor a more cost-efficient fund.
The yield is the income the ETF distributes, expressed as a percentage of its share price — it reflects the dividends the underlying REITs pay, net of the expense ratio. REIT ETF yields tend to be higher than the broad stock market because of the REIT 90% distribution rule, but the exact yield varies by the fund's holdings (a mortgage REIT ETF typically shows a higher yield than a broad equity REIT ETF, reflecting higher risk). As with individual REITs, don't chase the highest yield in isolation — weigh it against the fund's composition, risk, and cost. Yields are never promised and can change.
So compare REIT ETFs on expense ratio (lower is generally better) and yield (judged in context, not chased) — two numbers that materially affect your net return and income. So these metrics anchor a sound comparison. Expense ratios and yield — the expense ratio being the annual fee deducted from returns (lower keeps more return for you), and the yield being the income distributed (higher for mortgage-oriented funds, reflecting more risk, and never to be chased in isolation) — are two of the most important numbers when comparing REIT ETFs. Lower cost and context-appropriate yield matter most. Understanding them anchors the comparison. Compare REIT ETFs on expense ratio (lower is generally better, keeping more return) and yield (which varies by holdings and should be judged in context, not chased) — both materially affect your net return and income.
Liquidity Advantages
One of the biggest advantages of a REIT ETF is liquidity — the ability to buy and sell easily at a transparent market price. Because a REIT ETF trades on a stock exchange, you can buy or sell shares throughout the trading day at the prevailing market price, just like an individual stock. This intraday liquidity means you always know roughly what your shares are worth and can enter or exit a position quickly through an ordinary brokerage account, often with no commission.
This stands in sharp contrast to non-traded REITs, which aren't exchange-listed and offer only limited, periodic redemptions (commonly capped and sometimes suspended) at a periodically calculated net asset value. A REIT ETF gives you the diversification of a fund and the daily liquidity of a listed security at once — no redemption windows, no lock-ups, no waiting. For investors who value the ability to adjust their real estate allocation freely, this liquidity is a meaningful benefit. The trade-off is that, like any listed security, a REIT ETF's price moves with the market and can be volatile day to day.
So a REIT ETF offers intraday, exchange-based liquidity — trade like a stock, with no redemption caps or lock-ups — a major advantage over illiquid non-traded REITs. So liquidity is a defining benefit. Liquidity advantages — a REIT ETF trading on an exchange throughout the day at a transparent market price (buy or sell quickly through ordinary brokerage, often commission-free), versus the limited, capped, periodically-priced redemptions of non-traded REITs — make REIT ETFs an unusually accessible and flexible way to hold real estate. Intraday liquidity is a defining benefit, offset by daily price volatility. Understanding it shows why ETFs are convenient. A REIT ETF offers intraday, exchange-based liquidity — trade like a stock with no redemption caps or lock-ups — a major advantage over illiquid non-traded REITs, though its price fluctuates daily.
- A REIT ETF is an exchange-traded fund holding a basket of REITs in one share — instant diversification, intraday liquidity, and low cost.
- REIT ETFs are either broad (the total REIT market) or sector-specific (residential, industrial, mortgage) — diversification versus targeted exposure.
- Compare REIT ETFs on expense ratio (lower keeps more return) and yield (judged in context, not chased by the highest number).
- REIT ETFs trade intraday on an exchange — a major liquidity advantage over illiquid, redemption-capped non-traded REITs.
Choosing a REIT ETF
Choosing a REIT ETF comes down to a handful of practical factors. First, decide between broad and sector exposure based on your goal — a broad ETF for diversified, one-stop real estate exposure, a sector ETF for a targeted theme. Then compare expense ratios, favoring lower-cost funds since fees compound over time. Look at the holdings and the index the fund tracks: what REITs and sectors does it actually own, how many, and how concentrated are the top positions?
Next, consider the fund's size — its assets under management — and its trading volume, because larger, more heavily traded ETFs tend to have tighter bid-ask spreads (lower trading costs) and are less likely to be closed. Check the yield in the context of the fund's composition and risk, and look at tracking — how closely the ETF has followed its index over time, which reflects how efficiently it's run. Finally, make sure the fund's strategy matches your goals and risk tolerance: a mortgage REIT ETF behaves very differently from a broad equity REIT ETF.
So choose a REIT ETF by weighing broad-versus-sector fit, expense ratio, holdings and index, fund size and liquidity, yield in context, and tracking quality against your goals. So a systematic comparison leads to a sound choice. Choosing a REIT ETF — deciding broad versus sector, comparing expense ratios (favoring lower cost), examining the holdings and index, checking assets under management and trading volume (for tighter spreads and stability), evaluating yield in context, and reviewing tracking quality, all against your goals and risk tolerance — turns a crowded field into a manageable decision. A systematic comparison matters more than any single number. Understanding the criteria leads to a sound choice. Choose a REIT ETF by weighing broad-versus-sector fit, expense ratio, holdings and index, fund size and liquidity, yield in context, and tracking quality against your goals and risk tolerance.
No single number picks a REIT ETF for you: weigh broad-versus-sector fit, expense ratio, holdings, fund size, yield, and tracking together — and make sure the fund's strategy actually matches your goal.
REIT ETFs vs. Individual REITs
It's worth understanding how a REIT ETF compares to buying individual REITs, since both give you real estate exposure. A REIT ETF offers instant diversification — one purchase spreads your money across many REITs and sectors, reducing the impact of any single company's troubles — along with professional index construction, low cost, and liquidity. The trade-off is that you don't choose the specific REITs; you accept the index's composition and can't overweight a REIT you particularly favor or avoid one you don't.
Buying individual REITs gives you control — you can select specific companies, sectors, and yield profiles, and tailor a portfolio to your views and income needs. But it requires research, ongoing monitoring, and enough holdings to be diversified, and a concentrated bet on one or two REITs carries more single-company risk. Some investors use a core-and-satellite approach: a broad REIT ETF as a diversified core, supplemented by a few individual REITs (or sector ETFs) for targeted exposure. Both are legitimate; the choice depends on how much control and effort you want.
So a REIT ETF trades stock-picking control for instant diversification, low cost, and simplicity, while individual REITs offer control at the cost of more effort and concentration risk. So understanding the comparison helps you decide your approach. REIT ETFs vs. individual REITs — an ETF offering instant diversification, low cost, liquidity, and simplicity (but no control over which REITs you own), versus individual REITs offering control and tailoring (but requiring research, monitoring, and enough holdings to diversify) — frames how to build real estate exposure. A core ETF plus satellite picks can blend both. Understanding the comparison guides your approach. A REIT ETF trades stock-picking control for instant diversification, low cost, and simplicity, while individual REITs offer control at the cost of research and concentration risk — many investors blend a core ETF with satellite picks.
How Baker 1031 Helps You Understand REIT ETFs
Baker 1031 Investments helps investors understand REIT ETFs — what a REIT ETF is, the difference between broad and sector ETFs, how to compare expense ratios and yield, the liquidity advantages over non-traded REITs, how to choose a REIT ETF, and how ETFs compare to individual REITs — so you can decide whether a REIT ETF fits your goals and how it might sit alongside other real estate vehicles.
Publicly traded REIT ETFs are bought and sold like any listed security through an ordinary brokerage account, with no special qualification. Where Baker 1031 adds value is in helping you see the full picture: how a liquid, diversified REIT ETF compares to non-traded REITs and to DSTs, which are offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), with any recommendation following a suitability review and typically requiring accredited or otherwise suitable investors. We provide educational information, not specific fund recommendations or picks — we don't tell you which ticker to buy. Baker 1031 does not provide tax or legal advice; your CPA handles how REIT ETF dividends are taxed in your situation, including the ordinary-income character and the Section 199A deduction. Yields and returns are never promised, ETF prices fluctuate, and past performance doesn't guarantee future results. Our role is to help you understand REIT ETFs clearly and see where they fit among your real estate options.
Frequently Asked Questions
What is a REIT ETF?
A REIT ETF is an exchange-traded fund that holds a basket of many REITs in a single security. Instead of buying shares of one Real Estate Investment Trust at a time, you buy one share of the ETF, which represents a proportional slice of all the REITs the fund holds. The fund pools investor money, invests it across many REITs (usually to track a published real estate index), and trades on a stock exchange — combining the diversification of a fund with the tradability of a stock. Because it holds many REITs at once, a single purchase gives you instant diversification across dozens or hundreds of real estate companies and multiple property sectors. The ETF passes through the dividends its underlying REITs pay and charges a small annual fee (the expense ratio). So a REIT ETF is an accessible, low-cost, low-minimum way to add broad real estate exposure without researching and buying individual REITs one by one.
How is a REIT ETF different from a single REIT?
The key difference is diversification and control. A single REIT is one company that owns or finances real estate; buying its shares concentrates your investment in that one company's properties and management. A REIT ETF holds a basket of many REITs, so one purchase spreads your money across dozens or hundreds of companies and multiple sectors, reducing the impact of any single REIT's troubles. The trade-off is control: with a single REIT you choose exactly which company and sector you own, while with an ETF you accept the index's composition and can't overweight or avoid a particular REIT. A REIT ETF also offers professional index construction, low cost, and liquidity, while individual REITs require research and monitoring to diversify properly. So a REIT ETF gives instant diversification and simplicity at the cost of stock-picking control, while a single REIT gives control at the cost of more effort and concentration risk. Many investors blend both.
What is the difference between a broad and a sector REIT ETF?
A broad REIT ETF tracks the total REIT market — holding REITs across all the major property sectors (residential, industrial, retail, office, healthcare, data centers, self-storage, and more) in proportions that mirror a broad real estate index. This gives you one-stop, diversified exposure to real estate as an asset class without taking a view on any single sector. A sector-specific REIT ETF concentrates in one slice of the market — for example, a residential, industrial, or mortgage REIT ETF — letting you target a particular real estate theme you find attractive. The trade-off is that a sector ETF is less diversified and more exposed to the fortunes of that single sector; a mortgage REIT ETF, for instance, carries the interest-rate sensitivity characteristic of mortgage REITs. So a broad ETF offers wide diversification, while a sector ETF offers targeted exposure with more concentration risk. Choose based on whether you want one-stop diversification or a pointed bet on a specific theme.
What is an expense ratio, and why does it matter?
An expense ratio is the annual fee a fund charges, expressed as a percentage of its assets — for example, a 0.10% expense ratio means $10 a year per $10,000 invested. It's deducted from the fund's returns automatically, so you never see a bill, but it directly reduces your net return. That's why it matters: a lower expense ratio means more of the fund's return stays in your pocket, and over years the difference compounds meaningfully. Because broad REIT index ETFs are passively managed and competition has driven costs down, expense ratios on many REIT ETFs are quite low, and comparing them is a straightforward way to favor a more cost-efficient fund. Sector or more specialized ETFs sometimes carry higher fees. So when comparing REIT ETFs, the expense ratio is one of the most important numbers — lower is generally better, all else equal — though it should be weighed alongside the fund's holdings, yield, size, and how well it tracks its index, not in isolation.
Do REIT ETFs pay dividends?
Yes — REIT ETFs pay dividends, because they pass through the distributions that their underlying REITs pay. Since REITs are required to distribute at least 90% of their taxable income, the REITs inside the ETF generate substantial dividend income, and the ETF distributes that income to its shareholders, typically on a quarterly schedule (net of the fund's expense ratio). The ETF's yield — its annual distribution as a percentage of its share price — tends to be higher than the broad stock market because of this 90% distribution rule. The exact yield depends on the fund's holdings: a mortgage REIT ETF usually shows a higher yield than a broad equity REIT ETF, reflecting higher risk. Keep in mind that the dividends are not guaranteed and can change as the underlying REITs' distributions change, and the ETF's share price fluctuates. So REIT ETFs are an income-oriented investment, but treat the yield as variable and judge it in the context of the fund's composition and risk, not in isolation.
Are REIT ETFs liquid?
Yes — liquidity is one of the biggest advantages of a REIT ETF. Because a REIT ETF trades on a stock exchange, you can buy or sell shares throughout the trading day at the prevailing market price, just like an individual stock, usually through an ordinary brokerage account and often with no commission. This intraday liquidity means you always know roughly what your shares are worth and can enter or exit a position quickly, with no redemption windows, lock-ups, or waiting. This stands in sharp contrast to non-traded REITs, which aren't exchange-listed and offer only limited, periodic redemptions (commonly capped and sometimes suspended) at a periodically calculated net asset value. So a REIT ETF combines the diversification of a fund with the daily liquidity of a listed security. The one caveat is that, like any listed security, an ETF's price moves with the market and can be volatile day to day — liquidity lets you trade freely, but it doesn't eliminate price risk. For investors who value flexibility, ETF liquidity is a meaningful benefit.
How do I choose a REIT ETF?
Start by deciding between broad and sector exposure based on your goal — a broad ETF for diversified, one-stop real estate exposure, a sector ETF for a targeted theme. Then compare expense ratios, favoring lower-cost funds since fees compound over time. Look at the holdings and the index the fund tracks: what REITs and sectors it owns, how many, and how concentrated the top positions are. Consider the fund's size (assets under management) and trading volume, because larger, more heavily traded ETFs tend to have tighter bid-ask spreads and are less likely to close. Check the yield in the context of the fund's composition and risk, and review tracking — how closely the ETF has followed its index, which reflects how efficiently it's run. Finally, confirm the strategy matches your goals and risk tolerance, since a mortgage REIT ETF behaves very differently from a broad equity REIT ETF. So weigh broad-versus-sector fit, cost, holdings, size, yield, and tracking together — no single number decides it, and we don't recommend specific funds.
What is tracking, and why does it matter for a REIT ETF?
Tracking refers to how closely an ETF follows the performance of the index it's designed to mirror. Most REIT ETFs are passive funds built to replicate a real estate index, so ideally the ETF's return (before fees) should closely match the index's return. The small gap that exists — called tracking difference or tracking error — reflects costs, the fund's replication method, cash drag, and how efficiently it's managed. A fund that tracks its index tightly is doing its job well; persistent, large underperformance versus the index can signal higher hidden costs or inefficiency. For a REIT ETF, good tracking matters because it means you're actually getting the diversified real estate exposure the index represents, with returns reduced only by the stated expense ratio rather than by unexplained slippage. So when comparing REIT ETFs, reviewing historical tracking alongside the expense ratio gives you a fuller picture of the true cost of ownership. Tight tracking and a low expense ratio together indicate an efficiently run, cost-effective fund worth favoring, all else equal.
Are mortgage REIT ETFs riskier than equity REIT ETFs?
Generally, yes — mortgage REIT ETFs carry distinct and often greater risks than broad equity REIT ETFs. A mortgage REIT ETF holds mortgage REITs (mREITs), which don't own property but finance real estate by holding mortgages and mortgage-backed securities, earning the interest-rate spread between what those assets pay and their cost of borrowing. This makes them highly sensitive to interest rates: when rates move or the yield curve shifts, the spread (and the distribution) can compress, and share values can fall. Mortgage REITs also often use significant leverage, amplifying both gains and losses. As a result, mortgage REIT ETFs typically show higher yields than equity REIT ETFs — but that higher yield is compensation for greater risk, not a free lunch. A broad equity REIT ETF, by contrast, holds property-owning REITs across many sectors and tends to be more diversified and less rate-spread-sensitive. So if you're drawn to a mortgage REIT ETF's higher yield, understand that it comes with elevated interest-rate and leverage risk, and size the position accordingly.
Can I hold a REIT ETF in a retirement account?
Yes — REIT ETFs can be held in retirement accounts such as IRAs and 401(k)s, and many investors prefer to hold them there for tax reasons. Because most REIT dividends are taxed as ordinary income rather than at the lower qualified-dividend rates, holding a REIT ETF in a tax-advantaged account can shelter that ordinary-income distribution from current taxation, letting it compound tax-deferred (traditional account) or tax-free (Roth). The trade-off is that the Section 199A deduction, which provides a 20% deduction on qualified REIT dividends, only applies in taxable accounts — so it provides no benefit inside an IRA. Many investors weigh these factors and often favor placing REIT-heavy holdings in tax-advantaged accounts because sheltering the ordinary income tends to outweigh losing the 199A deduction, though the right placement depends on your situation. So REIT ETFs are well suited to retirement accounts, and asset location can affect your after-tax outcome. Baker 1031 doesn't provide tax advice — confirm the best placement with your tax advisor for your specific circumstances.
How are REIT ETF dividends taxed?
REIT ETF dividends are generally taxed the same way as the underlying REIT dividends, since the ETF passes them through. Most REIT ordinary dividends are taxed as ordinary income rather than at the lower qualified-dividend rates, because the REITs themselves paid no corporate tax. However, a 20% deduction under Section 199A applies to qualified REIT dividends, lowering the effective top federal rate on those dividends to roughly 29.6%; the 199A deduction was made permanent by the 2025 OBBBA legislation and applies only in taxable accounts. Some of an ETF's distribution may also be classified as return of capital (which reduces your cost basis rather than being currently taxed) or as capital-gain distributions (taxed at capital-gains rates). The ETF reports the breakdown to you on Form 1099-DIV. So REIT ETF dividends are mostly ordinary income with a 20% deduction, plus possible return-of-capital and capital-gain components. Baker 1031 doesn't provide tax advice — verify the current rules and your specific treatment with your tax advisor, as the details can be technical.
Is a REIT ETF a good way to start investing in real estate?
For many investors, a REIT ETF is one of the most accessible ways to start investing in real estate. It requires no large minimum, no property management, and no research into individual REITs — a single, low-cost purchase gives you instant diversification across many real estate companies and sectors, and you can buy or sell it any trading day through an ordinary brokerage account. This combination of low cost, diversification, liquidity, and simplicity makes a broad REIT ETF a sensible starting point for gaining real estate exposure as part of a diversified portfolio. As you learn more, you might supplement it with individual REITs, sector ETFs, or, for different goals, other vehicles like DSTs. That said, a REIT ETF is still an equity-like investment whose price fluctuates and whose dividends aren't guaranteed, so size it to fit your overall plan and risk tolerance. So a broad REIT ETF can be an excellent entry point to real estate investing — accessible, diversified, and inexpensive — provided you understand it carries market risk like any stock-market investment.
Do REIT ETFs qualify for a 1031 exchange?
No — REIT ETFs do not qualify for a 1031 exchange. A 1031 exchange requires the exchange of like-kind real property held for investment or business use, and a REIT ETF share is a security (an interest in a fund that owns shares of REITs), not real property — so it's two steps removed from like-kind real estate and clearly doesn't qualify. This means you can't sell investment real estate and 1031 directly into a REIT ETF to defer capital-gains tax. If 1031 deferral is your goal, the eligible vehicle is like-kind real property, such as a Delaware Statutory Trust (DST), which is structured to be treated as a direct interest in real estate. A DST can later be acquired by a REIT through a 721 (UPREIT) exchange, but that path involves an actual REIT structure, not an ETF. So a REIT ETF is a convenient, liquid way to own real estate as a securities investment, but it has no role in a 1031 exchange. Confirm 1031-eligible options with your tax advisor and a qualified intermediary.
What are the risks of investing in a REIT ETF?
A REIT ETF carries the same underlying risks as the REITs it holds, plus the characteristics of a listed security. Market risk: the ETF's share price fluctuates with the market and can fall even when underlying properties are stable. Interest-rate risk: REITs are sensitive to rising rates, which can pressure prices and, for mortgage REIT ETFs, the spreads that drive income. Sector and concentration risk: a sector-specific ETF (residential, industrial, mortgage) is exposed to the fortunes of that single sector, while even a broad ETF is concentrated in real estate as an asset class. Distribution risk: the ETF's dividends aren't guaranteed and change with the underlying REITs' distributions. There's also a small layer of fund risk (the expense ratio and tracking difference). So while a REIT ETF offers diversification, liquidity, and low cost, it's a real investment that can lose value. Diversifying across asset classes, choosing broad over narrow exposure where appropriate, and sizing the allocation to your risk tolerance help manage these risks — but they don't eliminate them. Past performance doesn't guarantee future results.
How does Baker 1031 help me understand REIT ETFs?
We help investors understand REIT ETFs — what a REIT ETF is, the difference between broad and sector ETFs, how to compare expense ratios and yield, the liquidity advantages over non-traded REITs, how to choose a REIT ETF, and how ETFs compare to individual REITs — so you can decide whether a REIT ETF fits your goals and how it sits alongside other real estate vehicles. Publicly traded REIT ETFs trade like any listed security through ordinary brokerage, with no special qualification. Where we add value is helping you see the full picture: how a liquid, diversified REIT ETF compares to non-traded REITs and DSTs, which are offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), with any recommendation following a suitability review and typically requiring accredited or otherwise suitable investors. We provide educational information, not specific fund picks. Baker 1031 doesn't provide tax or legal advice — your CPA handles how ETF dividends are taxed. Yields and returns are never promised, prices fluctuate, and past performance doesn't guarantee future results.
Glossary
- REIT ETF
- An exchange-traded fund holding a basket of REITs in one share.
- Exchange-Traded Fund (ETF)
- A fund whose shares trade on an exchange like a stock.
- Broad REIT ETF
- An ETF tracking the total REIT market across all sectors.
- Sector REIT ETF
- An ETF concentrated in one slice (residential, industrial, mortgage).
- Expense Ratio
- The annual fee a fund charges, deducted from returns.
- Yield
- The annual distribution as a percentage of share price.
- Index
- The benchmark of REITs a passive ETF aims to replicate.
- Tracking Difference
- How closely an ETF follows its underlying index.
- Assets Under Management (AUM)
- The total value of assets a fund holds.
- Intraday Liquidity
- The ability to trade ETF shares throughout the day.
- Bid-Ask Spread
- The gap between buy and sell prices, a trading cost.
- Diversification
- Spreading exposure across many REITs to reduce risk.
- Mortgage REIT (mREIT)
- A REIT earning mortgage interest, higher-yield and higher-risk.
- Non-Traded REIT
- An unlisted, illiquid REIT (the opposite of a liquid ETF).
- Section 199A Deduction
- The 20% deduction on qualified REIT dividends (taxable accounts).
- 90% Distribution Rule
- The REIT requirement driving high ETF distribution yields.
Sources & References
- U.S. Securities and Exchange Commission. Investor.gov — Exchange-Traded Funds (ETFs)
- U.S. Securities and Exchange Commission. Investor.gov — Real Estate Investment Trusts (REITs)
- Nareit. What's a REIT (Real Estate Investment Trust)?
- IRS. About Form 1099-DIV, Dividends and Distributions
Disclosures
This article is published by Baker 1031 Investments, LLC for general educational purposes for accredited investors and is not an offer to sell or a solicitation of an offer to buy any security, nor is it tax, legal, accounting, or investment advice or a recommendation. Any securities offering is made solely through a sponsor’s private placement memorandum (PPM) following a suitability determination. Securities offered through Aurora Securities, Inc. (ASI), member FINRA / SIPC; Baker 1031 Investments is independent of ASI.
Oil & gas mineral and royalty interests and DST programs are speculative, illiquid securities sold only to verified accredited investors and involve substantial risk, including possible loss of principal, commodity-price and production-decline risk, lack of control, and the risk that an intended 1031 exchange fails to qualify for tax deferral. Whether a particular interest qualifies as like-kind real property is a fact-specific legal determination that varies by state and by the terms of the instrument. Tax results depend on your individual circumstances. Consult your own CPA and attorney before acting. Past performance does not guarantee future results.
