Investing Insights Why REIT ETFs Still Work as Real Estate Slumps
Feb 13, 2026
Dan Sotiroff, associate director of U.S. Passive Strategies at Morningstar and ETFInvestor editor, breaks down REIT ETFs and why investors still use them. He covers index vs active strategies, rate-sensitivity and recent underperformance, tax treatment and best account placement, and top broad REIT ETF picks like Vanguard and Schwab. Practical allocation tips and alternatives round out the talk.
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What REITs Actually Are
- REITs are publicly traded companies that invest in and operate real estate assets like malls, offices, data centers, warehouses, and towers.
- They function like outsourced landlords, letting investors gain property exposure without managing tenants or upkeep.
How REIT Tax Rules Shape Behavior
- REITs get a tax break by avoiding corporate tax if they distribute most of their income to investors as dividends.
- That structure makes them high-yield and attractive to income investors but affects how REITs finance and grow their businesses.
Passive Vs. Active REIT ETF Differences
- REIT ETFs come as passive index trackers or active funds that may include real-estate-adjacent companies.
- Active managers can deviate from pure REIT exposure, holding casinos or Zillow-like firms that alter yield and risk profiles.