The Real Estate sector ranks eleventh out of the 11 sectors as detailed in our 2Q19 Sector Ratings for ETFs and Mutual Funds report. Last quarter, the Real Estate sector ranked eleventh. It gets our Very Unattractive rating, which is based on an aggregation of ratings of the 180 stocks in the Real Estate sector as of April 11, 2019. See a recap of our 1Q19 Sector Ratings here.
Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the sector. Not all Real Estate sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 16 to 188). This variation creates drastically different investment implications and, therefore, ratings.
Investors should not buy any Real Estate ETFs or mutual funds because none get an Attractive-or-better rating. If you must have exposure to this sector, you should buy a basket of Attractive-or-better rated stocks and avoid paying undeserved fund fees. Active management has a long history of not paying off.
Our Robo-Analyst technology empowers our unique ETF and mutual fund rating methodology, which leverages our rigorous analysis of each fund’s holdings. We think advisors and investors focused on prudent investment decisions should include analysis of fund holdings in their research process for ETFs and mutual funds.