IYR — iShares US Real Estate ETF
IYR was one of the original US REIT ETFs and tracks the Dow Jones US Real Estate Capped Index, which includes both equity REITs and real estate operating companies. Its 0.41% expense ratio is high compared to modern alternatives. Despite the cost disadvantage, IYR remains popular due to its long history and iShares brand recognition. Investors building new positions should carefully compare against lower-cost alternatives.
Top Holdings
Strategy
- →Note: high expense ratio (0.41%) — new investors should evaluate SCHH (0.07%) or VNQ (0.12%) first
- →Use if existing position with embedded gains makes switching costly in taxable accounts
- →Hold in tax-advantaged accounts where REIT income tax efficiency is maximized
- →Consider periodic review of whether cost savings from switching justify any tax cost
Best For
- ✓Existing IYR holders who have assessed switching costs and decided to stay
- ✓Legacy institutional allocations where the long iShares track record matters
- ✓REIT exposure in iShares-only platforms or 401(k) plan menus
- ✓Those who prefer iShares' broader real estate operating company inclusion
Key Risks
- ⚠Very high expense ratio (0.41%) — significantly more expensive than SCHH and VNQ
- ⚠Includes real estate operating companies in addition to pure REITs
- ⚠Real estate sector concentration risk and interest rate sensitivity
- ⚠REIT ordinary income tax inefficiency in taxable accounts
Similar ETFs
Frequently Asked Questions
Why does IYR cost so much compared to SCHH?
IYR was launched in 2000 and has maintained higher fees while the ETF industry became more competitive. SCHH and VNQ offer similar exposure at far lower cost. This is educational content, not financial advice.
Does IYR include non-REIT real estate companies?
Yes. IYR's Dow Jones US Real Estate Capped Index includes real estate operating companies alongside pure equity REITs, giving it slightly different composition than pure REIT indexes like the Dow Jones US Select REIT Index. This is educational content, not financial advice.
Does IYR pay dividends?
Yes, IYR distributes quarterly dividends from REIT and real estate operating company income. Most distributions are taxed as ordinary income. This is educational content, not financial advice.
Is IYR appropriate for new investors?
For new investors building a REIT allocation, SCHH (0.07%) or VNQ (0.12%) are generally better choices than IYR (0.41%) given the significant cost disadvantage. This is educational content, not financial advice.
How old is IYR?
IYR launched in June 2000, making it one of the oldest US REIT ETFs with over two decades of history spanning multiple real estate market cycles including the 2008 financial crisis. This is educational content, not financial advice.
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