SPDR vs. iShares: Is RWX or REET the Superior Global REIT ETF to Buy?

The iShares Global REIT ETF (NYSEMKT:REET) and SPDR Dow Jones International Real Estate ETF (NYSEMKT:RWX) differ most in geographic focus and cost, with REET offering broader exposure and lower fees, while RWX concentrates on international assets.

Both funds target real estate equities, but REET provides a global portfolio spanning both U.S. and international property companies, whereas RWX zeroes in on real estate outside the U.S. Investors weighing the two options may want to consider the costs, performance, and the unique exposures each brings to a real estate allocation.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The one-year return represents total return over the trailing 12 months.

RWX is notably more expensive, charging 0.59% annually compared with REET’s 0.14%, and its dividend yield trails slightly at 3.36% versus 3.71%. The cost difference could add up over time, especially for larger allocations or long-term investors.

Performance & risk comparison

What's inside

RWX hones in on international real estate, tracking companies outside the U.S. The fund holds 119 companies, with top positions in Mitsui Fudosan Co. Ltd., Scentre Group, and Swiss Prime Site Reg. Launched 19 years ago, RWX’s tilt toward non-U.S. names may appeal to investors seeking global diversification beyond the U.S. market.

REET, by contrast, delivers broader real estate exposure, including the United States in its 326 holdings. Its largest positions include Welltower Inc., Prologis REIT Inc., and Equinix REIT Inc. This larger holding count could contribute to a more representative global REIT portfolio for those wanting both U.S. and international coverage.

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What this means for investors

Since 2014, REET has delivered annualized total returns of 3.8% compared to RWX's mark of 0.7%. In addition to this track record of outperformance, REET looks stronger than RWX across an array of factors, including its:

• expense ratio being one-fourth that of its peer
• dividend yield being slightly higher and growing more over the last five years
• holdings count being three times larger than RWX
• much larger asset base

That said, the bulk of REET's holdings are U.S. REITs, so if you are looking for actual international exposure, RWX is a much better solution for you. However, nearly one-third of RWX's holdings are based in Japan -- with another 30% being tied to the United Kingdom, Australia, and Singapore -- so investors should be comfortable owning REITs in these countries due to their outsize allocation if they want to consider the REIT.

Ultimately, I could only consider REET due to the number of factors listed that are working in its favor. However, its 70% allocation to REITS in the U.S. may make it less of a "global" REIT than advertised.

Glossary

Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Dividend yield: Annual dividends paid by a fund, expressed as a percentage of its current price.
Beta: A measure of a fund's volatility relative to the overall market, typically the S&P 500.
AUM (Assets Under Management): The total market value of all assets managed by a fund.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Growth of $1,000 over 5 years: The ending value of a $1,000 investment after five years, including price changes and dividends.
Holdings: The individual securities or assets owned by a fund.
Cash exposure: The portion of a fund's assets held in cash or cash equivalents, not invested in securities.
Real estate equities: Stocks of companies that own, operate, or finance income-producing real estate.
REIT (Real Estate Investment Trust): A company that owns or finances income-producing real estate and distributes most income to shareholders.
Drawdown: The decline in value from a fund's highest point to its subsequent lowest point.
Issuer: The company or entity that creates and manages an ETF or mutual fund.

Josh Kohn-Lindquist has positions in Prologis. The Motley Fool has positions in and recommends Equinix and Prologis. The Motley Fool has a disclosure policy.