FREL VS XLRE
In the financial world, Exchange Traded Funds (ETFs) have become an increasingly popular investment vehicle. Among the numerous ETFs available, those focusing on real estate sectors often stand out. Two prominent names in this niche are FREL and XLRE. In this blog, we will dive deep into the comparison between FREL vs XLRE, highlighting their distinct characteristics, top holdings, and overall strategies.
FREL VS XLRE: Sectors and Top Holdings
When diving into the realm of real estate ETFs, it's essential to understand the sectors and top holdings they cover. FREL (Fidelity MSCI Real Estate Index ETF) and XLRE (Real Estate Select Sector SPDR Fund) both offer exposure to the real estate sector, but their focus can differ slightly.
FREL's portfolio is primarily derived from the MSCI USA IMI Real Estate Index, giving investors broad exposure to the US real estate sector. This ETF includes diverse holdings spanning residential, retail, and office spaces, as well as specialized real estate sectors like health care and industrial.
On the other hand, XLRE follows the Real Estate Select Sector Index, emphasizing more on large US companies within the real estate sector. The key difference here lies in the specific companies these ETFs hold. XLRE might have more exposure to blue-chip real estate companies, while FREL provides a more diversified approach with a mix of both large and mid-sized firms.
FREL overlap FREL VS XLRE
FREL VS XLRE: Capitalization Strategy
When comparing FREL vs XLRE from a capitalization perspective, their approaches differ in terms of market capitalization. FREL adopts a strategy that focuses on both large-cap and mid-cap stocks within the real estate domain. This blend can be beneficial for investors seeking a balance between stability and growth potential.
XLRE, in contrast, is more heavily weighted towards large-cap companies. This makes it a potentially more stable option for investors, especially during volatile market conditions. Large-cap companies usually have a track record of stability and consistency, making them a safe bet for conservative investors.
FREL VS XLRE: Tracking and Exposure
The primary goal of any ETF is to track a particular index as closely as possible. Both FREL and XLRE do a commendable job in this regard. However, the indices they track, and consequently the exposure they offer, differ.
FREL, tracking the MSCI USA IMI Real Estate Index, provides a comprehensive snapshot of the US real estate market. It casts a wider net, covering a range of companies within the sector. This can be seen as a double-edged sword – while it offers diversified exposure, it also means the ETF is exposed to both the highs and lows of the broader market.
XLRE, on the other hand, offers a more concentrated exposure. By focusing on the Real Estate Select Sector Index, investors get a curated view of the sector, predominantly highlighting the large players. This can result in potentially higher returns during good times but may also mean more vulnerability during downturns if the top players are affected.
Conclusion
Choosing between FREL and XLRE comes down to an investor's specific needs and risk appetite. Those who prefer a more diversified approach, with a mix of large and mid-cap exposure, might lean towards FREL. In contrast, those who value stability and a focus on blue-chip real estate companies might find XLRE more appealing.
Regardless of choice, both ETFs offer a unique way to access the dynamic world of real estate investment. As always, it's essential to conduct thorough research and possibly consult with financial professionals before making any investment decisions.
Sources:
- Fidelity. (2022). FREL: Fidelity MSCI Real Estate Index ETF. [online]
- SPDR. (2022). XLRE: Real Estate Select Sector SPDR Fund. [online]
- MSCI. (2022). MSCI USA IMI Real Estate Index Overview. [online]
- Select Sector SPDRs. (2022). Real Estate Select Sector Index Details. [online]
FREL ETF issuer
FREL ETF official page
FREL quote and analysis
Discover the top holdings, correlations, and overlaps of ETFs using our visualization tool.
Our app allows you to build and track your portfolio.
To learn more about the FREL Fidelity MSCI Real Estate Index ETF, access our dedicated page now.