SPDR Dow Jones International Real Estate ETF RWX is a good choice for investors seeking foreign real estate exposure, but excluding U.S. securities from its portfolio restricts its opportunity set and obscures its cost advantage. 

The Dow Jones Global ex US Select Real Estate Securities Index, which underpins this fund, absorbs large foreign REITs and real estate operating companies and weights them by market cap. The index provides a snapshot of the foreign real estate market because all of its constituents own and operate real estate.

Omitting U.S. securities is the main drawback here. U.S. real estate constitutes a heavy share of the worldwide market and roughly 54% of the average fund in the global real estate Morningstar Category. This strategy’s foreign-only mandate leaves it with a narrower opportunity set than its active peers, diminishing the impact of its low fee.

Market-cap weighting helps this fund overcome its limited scope. This approach channels the market’s collective view on the relative value of each holding and improves diversification. Generous rebalancing buffers combined with market-cap weighting help mitigate portfolio turnover and the associated transaction costs.

The fund stashed about 35% of its assets in Japanese securities as of October 2023, but it diversifies well elsewhere. It targets a range of property types, which limits interest-rate risk and ensures that one industry’s fate doesn’t dictate fund performance. Firm-specific risk is not a prominent concern, either. The top 10 holdings represented 25% of the portfolio as of October 2023, 13 percentage points less than its average peer.

REITs tend to be more sensitive to interest rates than most sectors, partially because interest rates have a direct impact on property values. Additionally, their cash flows are fixed from regular rent collections, making them more bondlike than most other sectors.

Analyst Rating

Held back by its foreign mandate.

Analyst

Ryan Jackson

SCANA

Clarus

Gladstone Land

Leggett & Platt

Gramercy Property Trust

Li Auto Inc.

Reaves Utility Income Fund

Mack-Cali Realty

Blend Labs

Natural Resource Partners

This is a reasonable choice for foreign real estate exposure, but excluding U.S. securities turns its category-relative performance into a referendum on the U.S. market. It earns an Average Process Pillar rating.

Average

Process

The day-to-day management of this fund falls under SSGA’s Global Equity Beta Solutions group. The team's global footprint, trading, and risk management processes enable low transaction costs and tight index tracking, supporting an Above Average People Pillar rating.

Karl Schneider and Keith Richardson are named mangers on this fund. Schneider helps lead the GEBS group and has been a named manager on this fund since January 2015. He joined SSGA in 1997. Richardson has managed the fund since 2017 and joined the firm in 1999. The group was previously helmed by Michael Feehily, longtime portfolio manager and leader at the firm. He departed in March 2023 after more than 30 years with the firm. 

The managers' objectives are to mitigate tracking error, transaction costs, and the tax consequences of their trades. A team of analysts helps the managers effectively track the index by anticipating index changes and corporate actions. The management team’s compensation is tied to index-tracking performance, operational efficiency, and contribution to process improvement, which aligns their interest with investors'. The team is subject to independent risk oversight.

Above Average

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

SPDR Dow Jones International Real Estate ETF

RWX tracks a market-cap-weighted index of firms involved in the ownership and operation of real estate internationally, excluding the United States.

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News for SPDR Dow Jones International Real Estate ETF ETF (RWX)