ALPS Active REIT ETF

REIT

Market cap $47.1M

Advisors and investors know that one source of allure with the real estate sector is its history of above-average dividends.

The REIT sector closed out 2025 with a tough December (-1.48%) and finishing the year with a -3.57% total return for 2025. Small caps (+0.51%) eked out a small gain in December, while mid caps (-1.77%), large caps (-2.55%) and micro caps (-3.88%) fell at the close of the year. 42.04% of REIT securities had a positive total return in December with only 38.36% in the black for the full year.

Real estate investment trusts (REITs) and the related ETFs didn't set the investing world ablaze last year, even as the Federal Reserve pared interest rates three times. However, that disappointment could give way to better things in 2026.

Owing in part to its capital-intensive nature, the real estate sector is often viewed as one of the groups most sensitive to interest rate fluctuations. Yet even with some help from the Federal Reserve over the past two years, the sector has disappointed.

The shutdown-delayed U.S. jobs report for November will shed light on the extent of labor market weakening that could help determine the Federal Reserve's next rate move.

With just three weeks left in 2025, it's fair to say the real estate sector and the related ETFs haven't done much this year to excite investors. As of Dec. 9, the largest ETF dedicated to the sector was barely positive on a year-to-date basis.

Year-to-date returns across the REIT market varied remarkably, with large gains from non-U.S. REITs and U.S. healthcare REITs, while U.S. residential and data center sectors were notable laggards. In the last three years, there have been two major forces impacting the performance of equity markets and real estate. Today's public REIT market looks a lot different than what most investors expect. Sectors previously considered niche have grown to be essential in today's economy and society.

Advisors and income investors have long leaned into passive strategies when it comes to accessing listed real estate investment trusts (REITs). But this is a space where active management can be advantageous over the long haul.

As measured by the largest ETF dedicated to the sector, real estate stocks are offering middling performances this year. That is disappointing considering the Fed has pared interest rates two times.

In addition to high levels of income, investors often target the real estate sector for predictability and steadiness. Those are sensible approaches when considering real estate investment trusts (REITs) often ink long-term contracts with tenants featuring inflation escalators.