Best REIT ETFs in Canada for 2021

Canadian REIT ETFs provide attractive investment attributes of real estate investment as it invests in several property-owning real estate companies in one go.

It reduces the risk for an investor who is betting on just one property of his own. REIT ETFs also grant a good diversification option to investors.

While investing directly in real estate might sound lucrative, it involves a lot of research and is both time and capital intensive. Moreover, a bad choice could lead to all that hard-earned money going down the drain.

What Is a REIT ETF?

A REIT ETF, offers a low-cost way to invest in the real estate asset class. Not only that, ETFs are highly liquid in nature and trade as normal stocks on the stock exchange.

There are a couple of REIT ETFs to be aware of:

  • REIT ETFs that invest directly in real-estate companies
  • REIT ETFs that invest in other REIT ETFs

Click here to get the MEGA REIT list

The Best REIT ETFs

The selection of REIT ETFs is a lot smaller than bond ETFs which should make it easier to find the best REIT ETF.

In fact, it’s going to be pretty easy to find the best as there aren’t many options. I have outlined the 6 candidates below.

wdt_IDTickerETF NameFeesMERYieldReturn
1ZREBMO Equal Weight REITs Index ETF0.550.614.1810.48
2VREFTSE Canadian Capped REIT Index ETF0.350.393.167.15
3XREiShares S&P/TSX Capped REIT Index ETF0.550.612.319.76
6CGRiShares Global Real Estate Index ETF0.650.712.406.50
8RITCI Canadian REIT ETF0.750.904.2410.57
9PHRPurpose Real Estate Income Fund0.650.783.816.22

To pick the best REIT ETF, it really depends on what you are looking for. Are you looking for growth? for income? or for both growth and income?

For growth, you are missing out. The performance for the top 2 REITs by return shines compared with the TSX but falters compared with the S&P500. If you want good returns, stick to the S&P 500 index with an index ETF like VFV ETF.

Dividend Adjusted Chart by Stock Rover - Try it out.

If you are looking for income, there are better options such as the FIE ETF (iShares Canadian Financial Monthly Income ETF) which sports a better yield and a decent return.

All in all, if you must hold a REIT ETF, I would say the best REIT ETF is ZRE (BMO Equal Weight REITs Index ETF). I prefer ZRE over RIT due to the lower fees.

ZRE, the best REIT ETF, holds 23 REITs. If you have particular interest in specific REITs, below is the table of the major REITs trading in Canada and ZRE has 23 of them (Click to see the list).

TickerKeyTickerCompanySectorIndustryScoreQuoteMarket CapP/EFPEEPSYield RawPayoutRatioPaymentsAnnual DistributionChowderGrowthRatingIncomeRatingTollboothAmbassadorAchieverAristocratKingCountryGraph
TSE:CAR.UNCAR.UNCanadian Apartment Properties REITReal EstateREIT - Residential50.8860.3110.477.767.767.772.290017.7000121.384.77001229Tollbooth - UnregulatedNONOYESNOCanada1
TSE:REI.UNREI.UNRioCanReal EstateREIT - Retail56.2322.047.0216.0916.091.374.360087.6000120.964.78001436Tollbooth - UnregulatedNONONONOCanada1
TSE:GRT.UNGRT.UNGranite REITReal EstateREIT - Industrial46.0089.025.866.876.8712.963.370021.9000123.007.46001337Tollbooth - UnregulatedNONOYESNOCanada1
TSE:AP.UNAP.UNAllied Properties REITReal EstateREIT - Office62.9443.735.5716.8516.852.603.890064.5000121.706.14001389Tollbooth - UnregulatedNONOYESNOCanada1
TSE:CHP.UNCHP.UNChoice Properties REITReal EstateREIT - Retail38.4415.064.9245.3545.350.334.9200102.5000120.745.37001492Tollbooth - UnregulatedNONOYESNOCanada1
TSE:HR.UNHR.UNH&R REITReal EstateREIT - Diversified50.3016.374.787.657.652.144.220032.2000120.690.00001422Tollbooth - UnregulatedNONONONOCanada1
TSE:SRU.UNSRU.UNSmartCentres REITReal EstateREIT - Retail55.4030.324.4019.7619.761.536.1000100.6000121.857.90001610Tollbooth - UnregulatedNONOYESNOCanada1
TSE:FCR.UNFCR.UNFirst Capital REITReal EstateREIT - Retail44.7017.983.9413.3113.311.352.400047.4000120.432.40001240Tollbooth - UnregulatedNONONONOCanada1
TSE:SMU.UNSMU.UNSummit Industrial Income REITReal EstateREIT - Industrial32.6321.263.603.973.975.352.65009.9000120.560.00001265Tollbooth - UnregulatedNONOYESNOCanada1
TSE:CSH.UNCSH.UNChartwell Retirement ResidencesReal EstateREIT - Healthcare Facilities27.9413.402.890.000.00-0.024.57000.0000120.613.83001457Tollbooth - UnregulatedNONOYESNOCanada1
TSE:NWH.UNNWH.UNNorthwest Healthcare Properties REITReal EstateREIT - Healthcare Facilities50.9812.992.849.049.041.446.160049.9000120.806.16001616Tollbooth - UnregulatedNONONONOCanada1
TSE:IIP.UNIIP.UNInterRent REITReal EstateREIT - Residential59.8917.432.439.709.701.801.870017.3000120.3310.64001187Tollbooth - UnregulatedNONOYESNOCanada1
TSE:KMP.UNKMP.UNKillam Apartment REITReal EstateREIT - Residential48.3121.112.329.129.122.313.220026.0000120.685.18001322Tollbooth - UnregulatedNONONONOCanada1
TSE:BEI.UNBEI.UNBoardwalk REITReal EstateREIT - Residential35.2847. - UnregulatedNONONONOCanada1
TSE:CUF.UNCUF.UNCominar REITReal EstateREIT - Diversified41.0011. - UnregulatedNONONONOCanada1
TSE:CRT.UNCRT.UNCT REITReal EstateREIT - Retail22.9017.531.8537.2537.250.474.780051.5000120.848.31001478Tollbooth - UnregulatedNONOYESNOCanada1
TSE:CRR.UNCRR.UNCrombie REITReal EstateREIT - Diversified27.4018.241.770.000.00-0.354.88000.0000120.894.87001488Tollbooth - UnregulatedNONONONOCanada1
TSE:AX.UNAX.UNArtis REITReal EstateREIT - Diversified49.3911.691.534.474.472.615.130021.6000120.605.13001513Tollbooth - UnregulatedNONONONOCanada1
TSE:D.UND.UNDream Office REITReal EstateREIT - Office55.4822.101.1214.2914.291.554.520056.4000121.000.00001452Tollbooth - UnregulatedNONONONOCanada1
TSE:MI.UNMI.UNMinto Apartment REITReal EstateREIT - Residential48.6724.080.880. - UnregulatedNONONONOCanada1
TSE:SGR.UNSGR.UNSlate Grocery REITReal EstateREIT - Retail39.1413.550.790. - UnregulatedNONONONOCanada1
TSE:MRG.UNMRG.UNMorguard North American Residential REITReal EstateREIT - Residential34.6818.070.7010.4110.411.743.870025.4000120.707.00001387Tollbooth - UnregulatedNONONONOCanada1
TSE:TNT.UNTNT.UNTrue North Commercial REITReal EstateREIT - Diversified41.267.530.6519.3219.320.397.8900151.7000120.597.89001789Tollbooth - UnregulatedNONONONOCanada1
TSE:APR.UNAPR.UNAutomotive Properties REITReal EstateREIT - Diversified58.7312.890.507.237.231.786.240038.9000120.806.07001624Tollbooth - UnregulatedNONONONOCanada1
TSE:PLZ.UNPLZ.UNPlaza Retail REITReal EstateREIT - Retail54.594.560.479.329.320.496.130057.5000120.288.63001613Tollbooth - UnregulatedNONONONOCanada1
TSE:MPCT.UNMPCT.UNDream Impact Trust REITReal EstateREIT - Diversified48.246.690.440. - UnregulatedNONONONOCanada1
TSE:MRT.UNMRT.UNMorguard REITReal EstateREIT - Diversified45.716.040.400.000.00-2.493.97000.0000120.240.00001397Tollbooth - UnregulatedNONONONOCanada1
TSE:SOT.UNSOT.UNSlate Office REITReal EstateREIT - Diversified48.585.420.378.328.320.657.370057.4000120.400.00001737Tollbooth - UnregulatedNONONONOCanada1
TSE:PRV.UNPRV.UNPRO REITReal EstateREIT - Diversified46.777.050.3317.2517.250.416.380099.0000120.456.38001638Tollbooth - UnregulatedNONONONOCanada1
TSE:DIR.UNDIR.UNDream IndustrialReal EstateREIT - Industrial40.9616.630.327.567.562.204.210028.8000120.704.21001421Tollbooth - UnregulatedNONONONOCanada1
TSE:HOT.UNHOT.UNAmerican Hotel Income Properties REITReal EstateREIT - Hotel & Motel35.664.130.320.000.00-0.770.00000.0000120.000.000010Tollbooth - UnregulatedNONONONOCanada1
TSE:INO.UNINO.UNInovalis REITReal EstateREIT - Office48.049.540.310.000.00-0.278.65000.0000120.838.75001865Tollbooth - UnregulatedNONONONOCanada1
TSE:BTB.UNBTB.UNBTB REITReal EstateREIT - Diversified61.314.100.3014.1714.170.297.3200102.4000120.300.52001732Tollbooth - UnregulatedNONONONOCanada1

Why Invest in REIT ETFs

Investors invest in REIT not only to gain from a diversified portfolio but also because of their lucrative distribution as REITs are required to pay out at least 90% of their income as distribution (difference between distribution and dividends).

Some REITs are focused while others are diversified (by asset class, investment objective or geographies). Since REITs are tied to a particular property class, a Canadian REIT ETF can offer a balanced investment option to investors.

Many real estate investors, therefore, prefer to invest through an exchange traded fund for their low cost, convenience, and diversification instead of trying to make sense of individual REITs.

Which REIT ETF Is Good For Your Portfolio

An investment through an ETF grants investors the ownership in dozens of REITs through a single investment and that too at a reasonable price.

Once an investor decides to invest through ETFs, he needs to find out the characteristics that make a good REIT ETF for him/her.

For example, whether you need an equity REIT or mortgage REIT or a combination of both. Few other things that investors can pay heed to are the expense ratio, returns, and assets under management of an ETF.

Investors should try and strike a balance between higher return and lower expense ratio.

Don’t fee pressure to have exposure to REITs. You don’t have to expose your portfolio to all sectors. REITs in Canada have limited growth unless they consolidate. At some point, I elected to not hold any REITs in my portfolio.

How To Buy REIT ETFs

To buy a REIT ETF, you need a discount broker as ETFs trade like stocks on a stock exchange for ETFs. You specify the number of shares you want to buy from the selected ETF and whether you want to pay the market price or you enter the price you want to pay.

I usually put a limit order using the market price just to avoid any blip from trading algorithm.

As it happens, there are many discount brokers that offer access to free ETFs and you should use a discount broker with free ETFs if you can. Questrade is one of those discount brokers with free ETFs.

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DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.