The real estate sector has underperformed the S&P 500 in recent years, and by a wide margin.I won't keep you in suspense. If you had invested $1,000 in the Vanguard Real Estate ETF (VNQ -0.51%) a decade ago, you would have about $1,770 today, assuming you reinvested your dividends along the way.This isn't a terrible outcome. After all, you wouldn't have lost money. But when you consider that $1,000 invested in an S&P 500 index fund such as the Vanguard S&P 500 ETF (VOO -0.37%) 10 years ago would be worth $3 ...

Real estate has underperformed the market for years, but the environment is about to get more favorable.The real estate sector has underperformed the S&P 500 (^GSPC 1.52%) significantly over the past decade. The Vanguard Real Estate ETF (VNQ 1.93%) delivered a 77% total return for investors over the past decade, compared with a stellar 290% return from the Vanguard S&P 500 ETF (VOO 1.46%).It isn't necessarily that real estate investment trusts, or REITs, are doing poorly as businesses. They aren't. Rather, ...

Market Overview - The S&P 500 and Nasdaq-100 indices are currently about 10% and 13% below their respective peaks from 2025, indicating they are out of bear market territory [1] - Some index funds and actively managed ETFs remain in bear markets, defined as being 20% or more below their highs [1] Small-Cap Stocks - Small-cap stocks are trading at their lowest price-to-book valuations relative to large-cap stocks in over 25 years, with the gap widening since the start of 2025 [2] - The average stock in the Russell 2000 small-cap index has a price-to-book multiple of 1.8, compared to 4.6 for the typical S&P 500 stock [3] Investment Vehicles - The Vanguard Russell 2000 ETF (VTWO) is highlighted as a preferred investment option due to its low expense ratio of 0.07% and its diversified holdings across 2,000 small-cap stocks [4] - The Vanguard Real Estate ETF (VNQ) is currently 25% below its all-time high, affected by the rising-rate environment that has placed REITs in a technical bear market [5][6] Real Estate Sector - Elevated interest rates negatively impact REITs by making risk-free returns more attractive, increasing the cost of capital, and leading to declines in commercial property values [6] - There is potential for a turnaround in the real estate sector, with expectations of four 25-basis-point Federal Reserve rate cuts by year-end, alongside a 4.2% yield from the VNQ ETF [7] Technology Sector - The Ark Autonomous Technology & Robotics ETF (ARKQ) is an actively managed ETF that focuses on AI investment opportunities, differing from traditional AI index funds by not being top-heavy with big tech stocks [8][9] - The ETF is currently about 18% below its 2025 peak and 30% below its all-time high, presenting a potential investment opportunity for those interested in AI [10]