It’s Not Just About Owning Property - It’s About Owning Access

Ask most people how to invest in real estate and they’ll mention buying a flat, renting it out, maybe flipping it later. Few will tell you that you can invest in entire portfolios of income-producing property, without ever managing a tenant or applying for a bond.

That’s the power of REIT ETFs. But before you get there, you need to understand how ETFs really work, and what to watch out for.

What Exactly Is an ETF (and what is it not)

An ETF (Exchange Traded Fund) is a financial product that tracks a basket of assets. It trades like a stock on an exchange, but inside it can hold anything from shares and bonds to commodities or listed property companies. It allows you to invest in many assets through a single purchase.

What it’s not: It’s not a guarantee of returns. It doesn’t give you direct ownership of the assets inside it. And it’s not immune to market fluctuations. ETFs are tools, not shortcuts.

Common Misconceptions About ETFs

For beginner investors, ETFs can seem deceptively simple. But there are a few common myths worth addressing:

• "ETFs are always low-risk." Not necessarily. ETFs still reflect market risk, sector-specific issues, and broader economic conditions. REIT ETFs, for example, can be hit hard by rising interest rates or downturns in commercial property.
• "ETFs guarantee dividends." Many REIT ETFs do pay out rental income as dividends, but these payments can fluctuate depending on earnings and market conditions.
• "ETFs always track the market." Only passive ETFs aim to track a benchmark. Active ETFs may behave very differently, depending on the fund manager's approach.

Understanding these realities can help set realistic expectations and avoid poor investment decisions.

Active vs Passive ETFs

The easiest way to think about the difference between active and passive ETFs is control. In a passive ETF, you’re buying into a pre-set list - often tracking a major index -where changes happen automatically based on rules. Nobody is trying to outsmart the market. It's structured, rules-based, and cost-efficient.

Active ETFs involve decision-making. Fund managers actively choose what to include, what to drop, and when to adjust. They aim to beat the benchmark, not just match it. They are often replicating a actively managed unit trust / fund. 

What this means:

• Cost: Passive ETFs usually have lower total expense ratios (TERs).
• Risk/Reward: Active ETFs can outperform, but they also carry greater risk of underperformance.
• Transparency: Passive ETFs disclose holdings frequently; active ones may not.

In REIT ETFs, this distinction shapes your exposure. A passive REIT ETF may mirror a property index. An active one might lean into sectors like logistics-, data centre, or Tower REITs, where managers see upside.

Why REIT ETFs Make More Sense Than Buying Property

Direct property ownership sounds straightforward. But it comes with costs: maintenance, taxes, vacancies, transfer fees, legal headaches, and illiquidity. You’re tying up capital in a single asset, hoping it appreciates.

REIT ETFs, on the other hand, offer:

• Instant diversification across sectors, regions, and currencies. 
• Liquidity (you can buy or sell like a share)
• Professional management and income distribution from rental yields

You’re still investing in real estate, just without the operational drag.

REIT ETF Risks to Be Aware Of

Like any investment, REIT ETFs come with their own risks. These include:

• Income fluctuations: Rental income is not guaranteed. Economic downturns can reduce occupancy rates and impact distributions.
• Liquidity pressure: Even though ETFs trade like shares, the underlying property assets are illiquid. During volatile periods, this can lead to wider bid-ask spreads.
• Interest rate sensitivity: Listed property tends to underperform in rising rate environments, which affects the market value of REIT ETFs.

Understanding these risks helps avoid surprises and reinforces the need for a long-term view.

What You Need to Know About Fees, Exposure, and Returns

Don’t assume all ETFs are equal. Read the factsheet.

• Fees: Look at the Total Expense Ratio (TER). A low TER doesn’t mean better value if the strategy doesn’t align with your goals.
• Exposure: What markets, property types, and regions are you investing in? Are you overweight in retail property, or do you have a balanced mix across logistics-, office- and healthcare REITS?
• Returns: Past returns don’t predict the future. Focus on consistency, income distribution history, and how the ETF behaved during downturns.

Reitway has a useful comparison tool for this: Compare Our ETFs

How an ETF Works

Think of an ETF like a shopping basket.

• You (the investor) buy one basket (a single ETF unit).
• Inside the basket are pieces of many assets: REITs, shares or bonds.
• The ETF provider manages what goes in or out, according to its strategy.
• You trade your basket on the exchange.

This makes ETFs ideal for building exposure to entire sectors - without the admin.

Glossary of some ETF and REIT Terms

• TER (Total Expense Ratio): The annual cost of managing the ETF, expressed as a percentage of assets.
• Dividend Yield: The income an investor earns from dividends, usually shown as a percentage of the ETF's current price.
• NAV (Net Asset Value): The total value of the ETF's assets, minus liabilities, divided by the number of units.
• Property Index: A benchmark tracking the performance of listed property shares or REITs.

Reitway Global – REIT ETFs for Informed Investors

Investing in property no longer requires buying bricks and dealing with tenants. REIT ETFs provide a smarter entry point for anyone looking to build long-term exposure to real estate. They offer transparency, liquidity, and a level of access once reserved for institutions.

At Reitway, we help investors understand what they’re buying. Because real estate may be tangible, but good investment decisions are built on clarity.

Explore our ETF Comparison Tool