Look at your investment portfolio. Do you have exposure to real estate? Is your exposure broad or is it limited to just one company?

Some individual investors feel they don’t need to own real estate inside because they already own a home or condominium. Some may even a vacation home or rental properties located close to where they live. While this certainly gives an investor exposure to local real estate, it misses national and international coverage to this important asset class.

Real estate is sometimes mis-classified as an “alternative investment” but in reality, it’s a core (or major) asset class that all core portfolios should have exposure to. It’s also one of the sectors I discussed in my latest podcast “The Sectors behind 2016 Stock Market Highs.”

Due to recent changes by Global Industry Classification Standard (GICS),  real estate got a big promotion and has now become its own sector within the S&P 500.

The Sector SPDR Real Estate ETF (NYSEARCA:XLRE) carves out and owns S&P 500 real estate companies. XLRE holds 28 publicly traded real estate companies like American Tower, Simon Property Group, and Public Storage. Being a member of the S&P 500 is reserved for world-class companies, so XLRE combines real estate exposure along with status of being inside a blue-chip index. With annual expenses of just 0.14%, XLRE is one of the lowest cost REIT funds around, especially compared to actively managed REIT funds.

The Vanguard REIT ETF (NYSEARCA:VNQ) takes a broader approach by attempting to replicate the performance and yield of the entire U.S. REIT marketplace. VNQ follows the MSCI US Real Estate Index, which contains 151 real estate companies. With $63 billion in assets, VNQ is one of the largest real estate funds in the world and annual expenses are just 0.12%. If you’re looking for a core building block to U.S. real estate, VNQ is a great choice.

One of the most common investment flaws I’ve discovered in the more than $150 million in Portfolio Report Cards I’ve done for readers is a lack of exposure to international real estate. Why do so many portfolios routinely miss exposure to real estate overseas?

The iShares Global REIT ETF (NYSEARCA:REET) owns both foreign and domestic publicly traded real estate companies. For just 0.14% in annual fees, REET is one of the best building blocks for global real estate coverage.

Owning real estate via low cost index ETFs accomplishes a few important missions. First, it allows you to diversify your investments away from other assets you may already own like common stocks (NYSEARCA:SCHB) and bonds (NYSEARCA:BOND). Next, it allows you to get instant market exposure to real estate – nationally and internationally –  in a very affordable package. Finally, it gives you intra-day liquidity to an asset class that’s not very liquid.

In summary, REITs are an excellent choice for retirees and near retirees whose investment strategy is shifting away from growth to income. Because of IRS tax rules, REITs must distribute 90% of their taxable income via shareholder dividends. And that’s why owning REITs, from a dividend income angle, is a highly attractive proposition.

One final benefit from owning REITs is that it absolves you from the responsibility of managing properties. In other words, the work of landlording is left up to the corporate professionals at each of the respective REIT companies held within the fund(s) you own.