8 Best REIT ETFs in Canada (Sep 2022): Invest in Real Estate

Thinking about ways to invest in real estate without physically purchasing an investment property?

The potential for REITs to transform real estate in Canada is high. For example, mortgage REITs in the US help to finance approximately 1.4 million homes, with US REITs contributing roughly 2.9 million full-time jobs to the economy in 2020.

We will cover the best REIT ETFs in Canada below and discuss some of their features.

Pros and Cons of REIT ETFs

Real estate investment trusts are one of the few ways to add real estate exposure to your investment account. 

Investing in REITs can be thought of as an alternative to buying an investment property directly, although there are some minor differences.

Pros
  • Better portfolio diversification through the addition of a different asset class
  • Accessing real estate through a liquid form
  • REITs generally pay a high yield to investors
  • Usually pay a monthly dividend
Cons
  • Some REIT ETFs can come with high fees
  • REITs behave more like stocks in the short term, and more like physical real estate in the long term
  • Different types of REITs can vary in performance based on market trends

Best REIT ETFs in Canada

1.  Vanguard FTSE Canadian Capped REIT Index ETF

Vanguard Logo
  • Ticker: VRE.TO
  • Currency: CAD
  • Inception Date: November 2, 2012
  • Assets under Management: $300.78 Million
  • Management Expense Ratio: 0.38%
  • Listed on: Toronto Stock Exchange
  • Dividend Yield: 3.47%
  • Approximate Holdings: 18
  • Management Style: Passive
  • Risk Rating: Medium
  • Distribution Frequency: Monthly
  • Stock Price: $28.3
  • YTD Return: -21.29%

Vanguard is an investment manager that offers a great REIT ETF in Canada. The REIT ETF offers exposure to Canadian REITs. VRE is passively managed and tracks the FTSE Canada All Cap Real Estate Capped 25% Index.

VRE has a long performance track record and is a large ETF in terms of assets under management. Its MER is among the lowest in Canada for a REIT ETF.

With just under 20 holdings, the ETF holds a good amount of underlying REITs. Considering that each REIT has its own real estate holding, the strategy is well-diversified.

VRE pays distributions to investors on a monthly basis. With a high dividend yield, you can expect a great level of income from this REIT ETF.

The ETF is labeled as being medium risk by Vanguard, which is standard for most REIT ETFs.

With excellent overall features, VRE is a great REIT ETF on the Canadian ETF shelf to consider adding to your investment portfolio.

2.  Horizons Equal Weight Canada REIT Index ETF

horizons logo
  • Ticker: HCRE.TO
  • Currency: CAD
  • Inception Date: January 22, 2019
  • Assets under Management: $55.65 Million
  • Management Expense Ratio: 0.30%
  • Listed on: Toronto Stock Exchange
  • Dividend Yield: 0%
  • Approximate Holdings: 8
  • Management Style: Passive
  • Risk Rating: Medium
  • Distribution Frequency: None
  • Stock Price: $24
  • YTD Return: -16.35%

Horizons, a well-known name in the ETF space in Canada, offers an interesting REIT ETF. The REIT ETF offers exposure to several Canadian REITs. HCRE is passively managed and tracks the Solactive Equal Weight Canada REIT Index (Total Return).

Similar to a lot of Horizons’ other total return ETFs, HCRE uses a derivative strategy (swap) to generate returns for clients. This means that the ETF does not hold the actual REITs, but rather swap agreements that offer an identical return. 

HCRE has a very short performance track record and is a fairly small ETF in terms of assets under management. Its MER is one of the lowest in Canada for a REIT ETF.

With approximately eight REIT holdings, the strategy is relatively concentrated (versus peer REIT ETFs). Keep in mind that each underlying REIT has a portfolio of properties that it invests in as well.

The ETF’s strategy (using swaps) has its pros and cons. From a tax efficiency standpoint, the ETF does not pay any distributions, so it is more tax efficient. From an income perspective, the lack of regular distributions will require you to sell units to raise cash.

HCRE carries a medium risk rating from Horizons, which is fairly standard for a REIT ETF.

Depending on whether you require a steady stream of distributions from your REIT ETF or not, HCRE may be a great, low-cost option to consider.

3.  Invesco S&P/TSX REIT Income Index ETF

Invesco logo
  • Ticker: REIT.TO
  • Currency: CAD
  • Inception Date: August 25, 2017
  • Assets under Management: $23.91 Million
  • Management Expense Ratio: 0.51%
  • Listed on: Toronto Stock Exchange
  • Dividend Yield: 3.93%
  • Approximate Holdings: 19
  • Management Style: Passive
  • Risk Rating: Medium
  • Distribution Frequency: Monthly
  • Stock Price: $19.5
  • YTD Return: -19.15%

Invesco is the investment manager behind a good REIT ETF in Canada. The cleverly-named REIT ETF invests in Canadian REITs. REIT is passively managed and tracks the S&P/TSX Capped REIT Income Index.

REIT has a medium-length performance track record and is a tiny ETF in terms of assets under management. Its small size does put it at risk of closing in the near future if it does not manage to grow in assets.

Having just under 20 holdings, REIT holds a substantial amount of underlying REITs, making it a well-diversified ETF. The ETF is relatively inexpensive from an MER perspective when compared to most REIT ETFs in Canada.

REIT pays distributions to investors on a monthly basis and has a high dividend yield. REIT is rated medium risk by Invesco, which is again standard for most REIT ETFs.

Assuming that REIT grows its assets in the future, it is a great REIT ETF to consider.

4.  BMO Equal Weight REITs Index ETF

BMO
  • Ticker: ZRE.TO
  • Currency: CAD
  • Inception Date: May 19, 2010
  • Assets under Management: $643.52 Million
  • Management Expense Ratio: 0.61%
  • Listed on: Toronto Stock Exchange
  • Dividend Yield: 4.50%
  • Approximate Holdings: 24
  • Management Style: Passive
  • Risk Rating: Medium
  • Distribution Frequency: Monthly
  • Stock Price: $21.5
  • YTD Return: -16.44%

BMO’s Equal Weight REITs Index ETF is another option to consider for adding Canadian real estate exposure to your portfolio. ZRE invests in Canadian REITS, is passively managed, and tracks the Solactive Equal Weight Canada REIT Index.

ZRE has a long performance track record and is one of the largest ETFs on our list in terms of assets under management. 

With over 20 underlying REIT holdings, ZRE is a well-diversified ETF.  ZRE’s MER is fairly average for a REIT ETF in Canada and is substantially higher than some of the low-fee options on our list.

ZRE has a substantial distribution yield and pays distributions to investors on a monthly basis. BMO labels ZRE as a medium-risk fund, which is, again, fairly standard.

Although not an inexpensive REIT ETF to consider, ZRE otherwise comes with fantastic features across the board. It is an excellent way to add Canadian real estate exposure to your portfolio.

5.  iShares S&P/TSX Capped REIT ETF

ishares logo
  • Ticker: XRE.TO
  • Currency: CAD
  • Inception Date: October 17, 2002
  • Assets under Management: $1.04 billion
  • Management Expense Ratio: 0.61%
  • Listed on: Toronto Stock Exchange
  • Dividend Yield: 3.60%
  • Approximate Holdings: 21
  • Management Style: Passive
  • Risk Rating: Medium
  • Distribution Frequency: Monthly
  • Stock Price: $15.89
  • YTD Return: -18.08%

Blackrock’s iShares Canadian lineup contains a great REIT ETF. ZRE invests in Canadian REITS, is passively managed, and tracks the Solactive Equal Weight Canada REIT Index.

XRE has a very long performance track record and is the largest REIT ETF on our list in terms of assets under management. 

With over 20 underlying holdings, XRE is another well-diversified REIT ETF.  XRE’s MER is average for a REIT ETF in Canada and is quite a bit higher than the low-fee options on our list.

XRE has a decent distribution yield, and pays distributions to investors on a monthly basis. XRE’s yield is relatively lower than most of the other ETFs on our list.

Blackrock labels XRE as a medium-risk fund, which is a standard rating for a REIT ETF.

Although very similar to VRE in terms of features, XRE’s lower annualized yield and equal MER may not be as attractive for some investors. The ETF has excellent features otherwise and is a great choice for adding Canadian real estate exposure.

6.   CI Canadian REIT ETF

CI Global Asset Management Logo
  • Ticker: RIT.TO
  • Currency: CAD
  • Inception Date: November 15, 2004
  • Assets under Management: $667.86 million
  • Management Expense Ratio: 0.86%
  • Listed on: Toronto Stock Exchange
  • Dividend Yield: 4.57%
  • Approximate Holdings: 64
  • Management Style: Active
  • Risk Rating: Medium
  • Distribution Frequency: Monthly
  • Stock Price: $15.91
  • YTD Return: -18.79%

CI’s Canadian REIT ETF is one of the few ETFs on our list that are actively managed. RIT invests primarily in Canadian REITs but has the flexibility to invest up to 30% of its assets into foreign securities. Since it is actively managed, RIT’s portfolio managers are looking to outperform their benchmark.

RIT has a very long performance track record and is another large REIT ETF on our list in terms of assets under management. 

With over 60 underlying holdings, RIT is extremely well diversified.  XRE’s MER is very high when compared to other Canadian REIT ETFs but it covers the active management as well as the additional research on the foreign security allocation.

RIT has an excellent distribution yield, and pays distributions to investors on a monthly basis, like most REIT ETFs. 

CI Global Asset Management labels XRE as a medium-risk fund.

Apart from its high MER, the CI’s REIT ETF has excellent features overall. If you believe in active management and value involvement from a portfolio management team, RIT is a great option to consider.

7.   CI Global REIT Private Pool ETF

CI Global Asset Management Logo
  • Ticker: CGRE.TO
  • Currency: CAD
  • Inception Date: May 21, 2020
  • Assets under Management: $94.23 million
  • Management Expense Ratio: 0.96%
  • Listed on: Toronto Stock Exchange
  • Dividend Yield: 4.46%
  • Approximate Holdings: 55
  • Management Style: Active
  • Risk Rating: Medium
  • Distribution Frequency: Monthly
  • Stock Price: $21.14
  • YTD Return: -17.29%

CI’s Global REIT Private Pool ETF is another ETF on our list that is actively managed. CGRE invests in global REITs and real estate securities, making it one of the few global REIT ETFs available in Canada. CGRE’s active management means that the portfolio managers are looking to outperform their benchmark.

The ETF has a very short performance track record and is a small ETF in terms of assets.

With just under 60 holdings, CGRE is well diversified. CGRE’s MER is very high when compared to other Canadian REIT ETFs but it reflects the additional costs of researching global securities as well as active management.

CGRE has a great distribution yield and pays distributions to investors on a monthly basis, like most REIT ETFs. CI Global Asset Management labels CGRE as a medium-risk fund.

As a global REIT ETF available in Canada, textbook investment theory makes it a great choice to consider within your portfolio as CGRE invests outside of Canada as well. The ETF’s performance over time should be monitored to determine if it justifies the ETF’s high fees.

8.   Harvest Global REIT Leaders Income ETF

Harvest Global REIT Logo
  • Ticker: HGR.TO
  • Currency: CAD
  • Inception Date: June 14, 2017
  • Assets under Management: $14.79 million
  • Management Expense Ratio: 1.36%
  • Listed on: Toronto Stock Exchange
  • Dividend Yield: 7.06%
  • Approximate Holdings: 32
  • Management Style: Active
  • Risk Rating: Medium
  • Distribution Frequency: Monthly
  • Stock Price: $6.95
  • YTD Return: -28.05%

Harvest’s HGR ETF is a unique REIT ETF available in Canada. HGR invests in global REITS and also uses a covered call strategy to increase the fund’s annualized yield significantly. HGR is an actively managed strategy.

The ETF has a medium-length performance track record and is a tiny ETF in terms of assets. The ETF’s small size puts it at risk of closing down early in the future if it can’t attract additional capital.

With over 30 global REIT holdings, HGR is a well-diversified ETF. HGR’s MER is the highest on our list by quite a margin but reflects the additional complexities of the global strategy and the covered call approach.

HGR has an extremely high dividend yield and pays distributions to investors on a monthly basis, like most REIT ETFs. CI Global Asset Management labels CGRE as a medium-risk fund.

If you are very focused on a high-income stream from your real estate investments, HGR is an option to consider. Be sure to keep an eye on the ETF’s asset level and performance going forward, as the fees are significantly higher than other REIT ETFs on our list.

What Makes a Good REIT ETF?

Choosing a good REIT ETF has a lot in common with picking a good fund.

A Low MER

As with all funds, a REIT charges investors an MER to cover the expenses of the fund. Investing in a REIT ETF with a relatively lower MER can help significantly boost performance over the long term.

A Stable Portfolio Management Team

Something that also applies to most investment strategies is the importance of a stable portfolio management team. 

Portfolio managers that manage a strategy over a long period of time with great results are important to consider. A REIT ETF that experiences a lot of turnover with its portfolio managers should generally be avoided.

Good Long-Term Performance

It’s important to look at the long-term performance of a REIT ETF, especially because different types of REITs perform better at different times in the market cycle.

Strong performance should be considered in terms of percent returns and also relative to a benchmark. Especially for actively managed strategies, the portfolio manager’s objective is always to outperform his or her benchmark.

A High Yield – If Needed

As an investor, you may be very concerned with how much cash flow your investments are generating. If this sounds like you, you will want to look for a REIT ETF that is paying a higher yield relative to others.

Are REIT ETFs Worth The Fees?

If you are investing with a long-term horizon, REIT ETFs are generally worth the fees that they cost as compared to actually buying the property. 

A REIT ETF is responsible for a large number of investment properties and takes responsibility for things such as collecting rent and managing properties. Replacing a REIT ETF on your own would require you to become a property manager for a large number of properties, which is likely impossible.

As a short-term investor, REIT ETFs can drop in value rapidly if the overall stock market experiences a correction. This is because other investors are rushing into cash and selling all asset classes. As a rule of thumb, investing in REIT ETFs or most medium-risk investments is inappropriate over a short time horizon.

Over a long period of time, REIT ETF returns are more similar to the returns of actual physical real estate. From 1977 to 2010, data shows that REITs have generally outperformed direct real estate investing.

High yields, additional diversification, and liquidity are all great reasons to consider REIT ETFs, and also why they are generally worth their fees.

However, many people prefer just buying a few REITs themselves directly to save on the MERs. That is also a great option for many investors.

Which REIT ETF is Best?

Choosing a REIT ETF to label as the absolute best is difficult to do for several reasons. 

Investors may value different characteristics of REIT ETFs. Some features that investors may be looking for in a REIT ETF can include:

  • High tax efficiency
  • A high-income stream
  • A relatively lower or higher risk profile
  • A longer track record
  • Lower fees

Deciding on the best REIT ETF will involve considering your specific circumstances and what features you value in a REIT ETF.

If you are looking for high tax efficiency, Horizons’ Equal Weight Canada REIT Index ETF is a good option to consider. This ETF also has the lowest MER on our list.

Harvest’s Global REIT Leaders Income ETF is a good pick if you value a high-income stream. 

The REIT ETF with the longest track record is iShares’ S&P/TSX Capped REIT ETF.

Make sure to consider your specific circumstances before choosing a REIT ETF to invest in.

How to Buy the Best REIT ETFs in Canada

The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:

Readers Choice
Qtrade
Qtrade
  • 105 commission-free ETFs to buy and sell
  • Excellent customer service
  • Top-notch market research tools
  • Easy-to-use and stable platform 
Low Fees
Wealthsimple Trade
Wealthsimple Trade
  • Stock and ETF buys and sells have $0 trading fees
  • Desktop and mobile trading
  • Reputable fintech company
  • Fractional shares available
Well-Rounded
Questrade
Questrade
  • ETF buys have $0 trading fees
  • Excellent market research tools
  • Most types of registered accounts available

To learn more, check out my full breakdown of the best trading platforms in Canada.

Conclusion

We have looked at a fairly complete list of REIT ETFs available on the Canadian shelf above.

With that said, REIT ETFs in Canada are not the only way to add real estate exposure to your portfolio. Individual stocks involved in real estate should also be considered as an alternative to REIT ETFs.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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