XLRE VS SCHH
In the dynamic realm of real estate ETFs, two giants have consistently made headlines for their strategies and performance: XLRE and SCHH. These funds offer investors the opportunity to gain exposure to the real estate sector without the need to directly purchase properties. But how do they stack up against each other? Here's a head-to-head comparison to determine which might be the better fit for your portfolio.
XLRE VS SCHH: Sectors and Top Holdings
When dissecting the portfolio compositions of both ETFs, one finds that there are both overlaps and differences. XLRE primarily focuses on Real Estate Management & Development and REITs. Notably, its top holdings typically include giants like American Tower Corporation, Prologis, and Simon Property Group.
SCHH, on the other hand, also has a heavy emphasis on REITs, with its top holdings comprising renowned entities such as Public Storage, Crown Castle International, and Equinix. While both ETFs center around real estate, their specific holdings and sector emphasis can lead to divergent performance, especially in niche market scenarios.
XLRE overlap XLRE VS SCHH
XLRE VS SCHH: Capitalization strategy
Capitalization strategy essentially refers to the method of weighting the holdings within the ETF. XLRE tends to lean more towards a market capitalization-weighted strategy, which means companies with larger market caps have a more significant influence on the ETF's performance.
SCHH, while also using a form of market-cap weighting, has been known to occasionally adopt a slight tilt towards certain sub-sectors or companies that they believe have more growth potential or are undervalued.
Investors should be mindful of these capitalization strategies. While the market-cap strategy might offer more stability, a tilted approach can capture more niche growth opportunities.
XLRE VS SCHH: Tracking and Exposure
In terms of tracking and exposure, both ETFs aim to emulate the performance of specific indices. XLRE tracks the Real Estate Select Sector Index, providing broad exposure to the US real estate sector. This means that its performance closely mirrors the real estate market’s overall ups and downs. If the sector performs well, so does XLRE, and vice versa.
SCHH, meanwhile, tracks the Dow Jones U.S. REIT Index, focusing on publicly-traded real estate investment trusts in the U.S. While this also provides broad real estate exposure, the emphasis on REITs can result in slightly different performance nuances compared to XLRE. This might appeal to investors specifically interested in the REIT space.
Conclusion
Both XLRE and SCHH are powerhouse ETFs in the real estate sector, offering investors solid opportunities to diversify their portfolios with property-related assets without the direct ownership hassles. Their strategies, top holdings, and tracking mechanisms, however, do vary.
XLRE is a more generalist approach, suitable for investors wanting broad exposure to the real estate market. Its market-cap weighted strategy also gives it a certain level of stability, influenced primarily by the biggest players in the sector.
On the flip side, SCHH, with its specific focus on REITs, is for those who believe in the potential of these entities. Its occasional tilt towards undervalued sectors or companies offers the possibility of tapping into niche growth opportunities.
Ultimately, the choice between XLRE VS SCHH comes down to individual investment goals, risk tolerance, and beliefs about the future of the real estate market and REITs. No matter which you lean towards, diversification remains key.
Sources
- SPDR Series Trust. “Real Estate Select Sector SPDR Fund (XLRE).” SPDRs.com.
- Charles Schwab. “Schwab U.S. REIT ETF (SCHH).” Schwab.com.
- Morningstar. "Comparative Analysis of Real Estate ETFs: XLRE and SCHH." Morningstar.com.
XLRE ETF issuer
XLRE ETF official page