State Street's RWO or Xtrackers' HAUZ: Which Real Estate ETF Is the Better Buy?

State Street SPDR Dow Jones Global Real Estate ETF (NYSEMKT:RWO) offers broader geographic reach including the U.S., while Xtrackers International Real Estate ETF (NYSEMKT:HAUZ) provides a lower-cost, international-only play on property.

Investors seeking real estate exposure often choose between domestic, international, or global portfolios. This comparison evaluates how RWO, which tracks a global index of property-related companies, stacks up against HAUZ, which specifically targets developed and emerging markets outside the United States. The State Street fund aims for a broad approach by capturing property owners across the globe, whereas the Xtrackers fund focuses on the diversification benefits of non-U.S. assets. This choice impacts not only geographic concentration but also cost and potential total return.

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 Xtrackers fund is significantly more affordable with an expense ratio of 0.10%, representing a 0.40 percentage point advantage over its peer. While the Xtrackers fund currently offers a slightly higher distribution yield, both provide meaningful income and liquidity for real estate investors.

Performance & risk comparison

What's inside

State Street SPDR Dow Jones Global Real Estate ETF (NYSEMKT:RWO) holds 226 positions across global real estate markets. Its sector composition includes roughly 89.00% in real estate and 8.00% in cash and other assets. Its largest positions include Welltower (NYSE:WELL) at 9.27%, Prologis (NYSE:PLD) at 7.69%, and Equinix (NASDAQ:EQIX) at 6.30%. The fund was launched in 2008. State Street SPDR Dow Jones Global Real Estate ETF has paid $1.60 per share over the trailing 12 months, which on its recent ~$50.43 share price works out to a 3.20% yield.

Xtrackers International Real Estate ETF (NYSEMKT:HAUZ) tracks 422 holdings in developed and emerging markets outside the U.S. Its portfolio is concentrated in real estate at approximately 96.00%. Top holdings include Goodman Group (ASX:GMG.AX) at 4.72%, Mitsubishi Estate (8802.T) at 3.22%, and Mitsui Fudosan (8801.T) at 2.60%. The fund was launched in 2013. Xtrackers International Real Estate ETF has paid $0.82 per share over the trailing 12 months, which on its recent ~$22.47 share price works out to a 3.60% yield.

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What this means for investors

RWO carries the word "global" in its name, but roughly half of its portfolio sits in U.S. real estate. It holds the same domestic REITs that most American investors already own through broader funds. For investors who already hold U.S. property exposure, adding RWO largely doubles down on what they already have rather than diversifying away from it.

That is the most important insight in this comparison. The international portion of RWO comes at a steep price, as RWO charges five times what HAUZ does. And that premium is buying a portfolio that is only halfway international.

If you specifically want international real estate alongside an existing domestic position, HAUZ is the more precise tool for that. Its dramatically lower cost and higher yield make it the more efficient vehicle for doing so.

For investors who want one fund to cover both U.S. and international real estate in a single holding, RWO's blended approach makes good sense, and its stronger recent returns reflect the continued strength of domestic REITs. For everyone else, HAUZ delivers more targeted international diversification at a fraction of the cost.

Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Equinix and Prologis. The Motley Fool has a disclosure policy.