REIT Winners And Losers: January's Trends Reshaping 2025

Real estate investment trusts (REITs) posted modest gains to begin 2025. According to Nareit data, the FTSE Nareit All Equity REITs Index rose 1.0% in January. However, the broader stock market outperformed, with the Russell 1000 gaining 3.2% and the Dow Jones U.S. Total Stock Market rising 3.1%.

While REITs stood strong, investors are weighing the impact of interest rates, sector performance, and income potential when considering REIT-focused ETFs. Here are three ETFs that have performed well in the past year:

iShares Residential and Multisector Real Estate ETF (NYSE:REZ)

This ETF’s price returns in the past year have been around 21.94%. The fund’s holding contains a few of the strongest names in the real estate industry. Welltower (NYSE:WELL) occupies the biggest chunk of the ETF’s total assets. The expense ratio is 0.48%. The ETF offers significant exposure to Healthcare REITs, which was among the best-performing REITs in January, per Nareit.

Vanguard Real Estate ETF (NYSE:VNQ)

This fund’s price has grown 9.41% in the past year. It tracks the MSCI US Investable Market Real Estate 25/50 Index and carries an expense ratio of 0.13%. The ETF provides double-digit exposure to Data Center REITs, Healthcare REITs, Industrial REITs, Retail REITs, and Telecom REITs. Healthcare REITs and Industrial REITs were among the best-performing in January.

This apart, the ETF is also exposed to Diversified REITs, Hotel & Resorts REITs, Multi-Family Residential REITs, Office REITs, and others. Companies like Equinix (NASDAQ:EQIX), American Tower Corp. (NYSE:AMT), and Welltower adorn the portfolio.

Also Read: Thornburg’s New Bond ETF Launches: A Peek Into TPLS And TMB

Invesco S&P 500 Equal Weight Real Estate ETF (NYSE:RSPR)

The ETF tracks the S&P 500 Real Estate Index and its price has returned 14.45% in the past year. The expense ratio it carries is 0.4%. Stocks of Boston Properties Inc (NYSE:BXP), American Tower and Vici Properties Inc (NYSE:VICI) are among this fund’s holdings.

Dividend Appeal

Despite recent volatility, REITs continue to offer compelling dividend yields, making them attractive for income-focused investors. According to the Nareit report, as of Jan. 31, the FTSE Nareit All Equity REITs Index carried a dividend yield of 3.93%, while the Mortgage REITs Index yielded a hefty 12.05%. By comparison, the S&P 500's dividend yield stood at just 1.19%.

Winners And Laggards

A closer look at January's sector performance reveals diverging trends within the REIT space. The best-performing property sectors were:

• Industrial REITs: up 11.1%
• Timberland REITs: up 8.1%
• Health care REITs: up 4.2%

Mortgage REITs performed well in January, with the FTSE Nareit Mortgage REITs Index rising 5.4%. Home financing REITs also had a great January, posting an 8.4% gain, while commercial financing REITs edged up 0.2%.

Meanwhile, the weakest segments were:

• Data center REITs: down 4.9%
• Lodging/resorts REITs: down 2.7%
• Specialty REITs: down 1.1%

ETF investors may find opportunities in targeted exposure to high-performing REIT segments while maintaining a diversified approach to balance risk and reward.

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