The real estate sector has gained about 19% this year, largely through the Vanguard Real Estate ETF (VNQ), which is popular for its broad, low-cost exposure to large U.S. REITs. However, VNQ's focus on large-cap REITs results in modest yields, less ideal for income-focused investors. In contrast, the Invesco KBW Premium Yield Equity REIT ETF (KBWY) targets small- and mid-cap REITs with higher yields, currently offering a forward yield near 7.9% paid monthly. While KBWY provides higher income, it carries greater risks including slower recovery from shocks, higher expense ratios, and sensitivity to interest rates. Investors might consider holding VNQ for diversification and adding KBWY for income needs, balancing risk and payout goals.
