State Street XLRE beats iShares ICF on cost and yield
State Street Real Estate Select Sector SPDR ETF (XLRE) offers a lower expense ratio and higher dividend yield than the iShares Select U.S. REIT ETF (ICF). The two funds are concentrated portfolios holding 30 positions each, with significant overlap in their largest holdings, including Equinix, Welltower, and Prologis.
State Street Real Estate Select Sector SPDR ETF (XLRE) offers a lower expense ratio and higher dividend yield than the iShares Select U.S. REIT ETF (ICF). The two funds are concentrated portfolios holding 30 positions each, with significant overlap in their largest holdings, including Equinix, Welltower, and Prologis.
The cost difference is distinct. XLRE carries an expense ratio of 0.08%, while ICF charges 0.32%. For an investor with a $10,000 portfolio, this translates to annual fees of $8 for XLRE versus $32 for ICF. This makes the State Street fund significantly more affordable, representing a savings of 0.24 percentage points.
Income potential favors the State Street fund as well. XLRE has a trailing-12-month distribution yield of 3.5%, based on distributions of $1.44 per share at a recent price of approximately $40.7. ICF has a trailing-12-month yield of 2.7%, based on distributions of $1.74 per share at a recent price of approximately $62.6.
Strategic differences define the two portfolios. XLRE provides exposure to the 30 real estate companies within the S&P 500 index, excluding mortgage REITs. The fund launched in 2015. Its largest positions are Welltower at 11.64%, Prologis at 8.69%, and Equinix at 7.18%. ICF, launched in 2001, tracks a specific group of large and liquid U.S. REITs selected for market prominence. Its largest positions are Equinix at 8.54%, Welltower at 8.35%, and Prologis at 7.99%. No sector breakdown is reported for the iShares fund.
Performance metrics show similar risk profiles between the two ETFs. Over the last five years, XLRE generated a total return of 10.5% with a compound annual growth rate of 2%. ICF delivered a total return of 11.4% with a compound annual growth rate of 2.2%. Beta, calculated from monthly returns over the available fund history up to five years, measures price volatility relative to the S&P 500.
While both funds offer comparable strategies and performance histories, XLRE holds advantages in both income generation and cost efficiency. These factors make XLRE likely the preferred choice for income-oriented investors seeking regular cash flow from real estate investment trusts.