FREL VS SCHH
Investors in search of real estate exposure without the direct ownership of property often turn to Real Estate ETFs. In the vast world of ETFs, FREL and SCHH emerge as two prominent players. How do these two measure up when pitted against each other? This blog will provide a comprehensive comparison, analyzing their sectors, top holdings, capitalization strategy, and tracking exposure.
FREL VS SCHH: Overview
Both FREL (Fidelity MSCI Real Estate Index ETF) and SCHH (Schwab U.S. REIT ETF) are designed to offer investors exposure to the U.S real estate sector. While FREL tracks the MSCI USA IMI Real Estate Index, which encompasses a broader range of real estate investments, SCHH shadows the Dow Jones U.S. Select REIT Index. These underlying indices play a significant role in shaping the ETFs' performance and sector allocation.
FREL VS SCHH: Sectors and Top Holdings
Peeling back the layers, FREL's diversified holdings spread across residential REITs, retail REITs, office REITs, and more. This broad spectrum is reflective of the MSCI USA IMI Real Estate Index's comprehensive approach to the real estate sector.
On the other hand, SCHH's top holdings are a bit more concentrated, thanks to its alignment with the Dow Jones U.S. Select REIT Index. Investors may find a heftier allocation towards sectors like specialized REITs, residential REITs, and office REITs.
Though both ETFs provide a solid foundation for real estate exposure, their sector allocation can influence their performance during sector-specific boom or downturn periods. Therefore, understanding these differences is crucial when determining which ETF aligns with one's investment goals.
FREL overlap FREL VS SCHH
FREL VS SCHH: Capitalization strategy
Capitalization strategy delves into the ETFs' preference for large-cap, mid-cap, or small-cap companies. FREL, given its alignment with the MSCI index, leans more towards a mix of large and mid-cap real estate companies. This blend potentially offers stability from the large caps, combined with the growth potential of mid-caps.
SCHH, by contrast, with its allegiance to the Dow Jones Index, is often more large-cap oriented. For investors who prioritize stability and established players in the real estate realm, SCHH might be more appealing.
FREL VS SCHH: Tracking and Exposure
One of the pivotal factors in ETF investment is the tracking error. It measures how closely an ETF follows its benchmark index. Historically, both FREL and SCHH have demonstrated commendable tracking accuracy. However, slight differences might emerge owing to management fees and the inherent differences in their respective indices.
Exposure-wise, FREL, with its broader index alignment, offers a more extensive glimpse into the real estate sector. SCHH, being more selective, provides a more concentrated look. Depending on an investor's appetite for diversification versus concentration, one might seem more attractive than the other.
Conclusion
When analyzing FREL VS SCHH, both ETFs present their unique strengths and considerations. FREL offers a broader exposure, ideal for those looking for comprehensive real estate representation in their portfolio. On the other hand, SCHH, with its focused approach, might be more fitting for investors who have specific sector preferences or those prioritizing large-cap stability.
At the end of the day, the choice between FREL and SCHH boils down to individual investment objectives, risk tolerance, and desired sector exposure. Investors are advised to look beyond just past performance and delve deep into the nuances of each ETF, ensuring alignment with their financial goals.
Sources
- Fidelity. (2020). FREL - Fidelity MSCI Real Estate Index ETF.
- Schwab. (2020). SCHH - Schwab U.S. REIT ETF.
- MSCI. (2020). MSCI USA IMI Real Estate Index.
- Dow Jones. (2020). Dow Jones U.S. Select REIT Index.
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