FREL vs KBWY

FRELAFidelity MSCI Real Estate Index ETF

KBWYBInvesco KBW Premium Yield Equity REIT ETF

In short

FREL Fidelity's take on US real estate: one index, about 150 property stocks, and a 0.08% fee against a 0.37% category median. Cheap beta on landlords, and one of the strongest implementations in its peer group.

KBWY Most real estate ETFs own the sector by size. KBWY goes yield hunting instead: a tight basket of roughly 30 equity REITs picked for premium payouts, with cash out the door monthly.

Stated mandate

FREL The fund seeks to track, before fees and expenses, the performance of the MSCI USA IMI Real Estate Index.

KBWY The fund seeks to track, before fees and expenses, the performance of the MSCI US REIT Index.

Why people hold it

• FREL 0.08% a year against a 0.37% median for US real estate funds. Among the category's leaders, only SCHH runs cheaper, and only by a basis point.
• Tracks the MSCI USA IMI Real Estate Index tightly, with very little drift from the benchmark it promises to follow.
• Plain vanilla plumbing: a 1940 Act index fund holding about 150 US real estate stocks. No leverage, no options overlay, cash paid out quarterly.
• Trading since 2015 and now a multi-billion-dollar fund with Fidelity's index desk behind it.

• KBWY A yield-first slice of the REIT market rather than a cap-weighted mirror of it: around 30 equity REITs screened for premium payouts, distributing monthly.
• At 0.35% a year, the fee sits a shade under the typical US real estate ETF, which is unusual for a screened, non-vanilla strategy.
• Live since 2010 and a close reader of its own rulebook: it stays tightly aligned with its stated yield mandate, and lands in the upper half of its real estate peer group.

Worth knowing

• FREL One sector, one country. US real estate can move on its own schedule for long stretches, and this fund rides every bit of that.
• Moderately traded rather than a volume leader in the category, which can show up as wider bid-ask spreads.
• Crowded shelf. SCHH, VNQ, USRT and XLRE cover similar ground at similar prices, so the real difference is which index each one follows.

• KBWY Roughly 30 holdings, so one landlord's bad quarter shows up here far louder than in broad REIT funds holding hundreds of names.
• Plain cap-weighted REIT trackers cost far less: SCHH at 0.07% and VNQ at 0.13% versus 0.35% here. You are paying for the yield screen.
• Moderately traded rather than a category heavyweight, so spreads can run wider than the largest real estate ETFs, especially in fast markets.

Full FREL profile⁠

Full KBWY profile⁠