uploads/2015/11/C16-ETF2.png

Investing in American Campus Communities through ETFs

By

Updated

Portfolio diversification through ETFs

Asset allocation is a primary factor responsible for investment returns. ETFs are a convenient way for investors to build a portfolio that meets specific asset allocation needs. In addition, ETFs are a convenient and easy way to diversity your portfolio across a number of asset classes.

Most ETFs track a market index, mirroring the performance of an entire market in a single trade. In this article, we’ll look at how sector-specific and sector-agnostic ETFs invest in American Campus Communities (ACC) stock.

Article continues below advertisement

Sector-specific ETFs

American Campus Communities (ACC) is a major stock on the NYSE (New York Stock Exchange), with a market capitalization of $4.5 billion. It’s part of an S&P 400 Index. Consequently, American Campus Communities sees allocation in most of the REIT-specific ETFs.

For example, the iShares Cohen & Steers REIT ETF (ICF) has 1.1% exposure in ACC. The iShares US Real Estate ETF (IYR) has a 0.53% stake in ACC. The SPDR Dow Jones Wilshire REIT ETF (RWR) has 0.76% exposure in ACC. Another top real estate ETF, the SPDR Dow Jones Wilshire Global Real Estate ETF (RWO), has 0.44% exposure in the company.

The REIT ETFs have an exposure in other REIT stocks such as AvalonBay Communities (AVB), Essex Property Trust (ESS), and Equity Residential (EQR).

The iShares US Real Estate ETF (IYR) is the biggest of the lot, with $4.5 billion in assets under management and an expense ratio of 0.43%. The iShares Cohen & Steers REIT ETF (ICF) has $3.5 billion in assets under management with an expense ratio of 0.35%.

The SPDR Dow Jones Wilshire REIT ETF (RWR) has $3 billion in assets under management with an expense ratio of 0.25%, while the SPDR Dow Jones Wilshire Global Real Estate ETF (RWO) has $1.9 billion in assets under management with an expense ratio of 0.5%.

Sector-agnostic ETFs

The holdings of a particular company in an ETF depend on the investment objective of the ETF. Consequently, sector-specific ETFs should have a higher exposure to companies in the sector than sector-agnostic ones. We outline the holdings of various ETFs in the above graph.

Sector-agnostic ETFs such as the iShares S&P Mid-Cap 400 Growth ETF (IJK) and the First Trust Mid Cap Growth AlphaDEX Fund (FNY) also have an exposure to ACC with 0.37% and 0.30%, respectively. IJK has an asset base of $5.4 billion and an expense ratio of 0.25%.

Please visit Market Realist’s REIT page to learn more about this industry.

Advertisement

More From Market Realist