S&P 500 Investors Get New Choice For Direct REIT Exposure

By | October 15, 2015

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By Ronald Delegge Real estate investment trusts (REITs) have long been buried inside the S&P 500 but have now received a giant promotion. S&P Dow Jones Indices and MSCI — the index providers who jointly maintain the GICS system for organizing industry sectors — decided to create a stand-alone real estate sector. As a result, S&P Dow Jones Indices has launched two new sector indices that break out financial services companies and real estate firms from within the existing S&P 500 Financials Select Sector Index. The new ETF – the Real Estate Select Sector SPDR ETF (NYSEARCA: XLRE ) currently owns 25 real estate stocks or “REITs” that are all members of the S&P 500. XLRE will differ from other real estate ETFs like the SPDR Dow Jones REIT ETF (NYSEARCA: RWR ) because of its primary focus on a small pool of U.S. large-cap REITs. In contrast, RWR owns 97 U.S. based REITs with a market cap size that is large, mid, and small. Additionally, XLRE does not hold mortgage REITs. The GICS method was created by MSCI and Standard & Poor’s in 1999 and is a four-tired, hierarchical classification system. GICS allows investors to identify and analyze a customized group of companies using a common global standard. The existing Financial Select Sector SPDR ETF (NYSEARCA: XLF ), which follows the broader financial sector, will not be impacted by the change. Both real estate and financials will continue to be covered inside XLF and remain a choice for investors looking for broad-based exposure to financials. Disclosure:None Share this article with a colleague Scalper1 News

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