One way to bet on the Federal Reserve's latest move to lift the sinking housing market is to buy a rental property. Another cheaper and easier option: invest in an ETF that owns residential and apartment real estate investment trusts.

So far this year, interest in the 27 exchange-traded funds that invest in REITs has been tepid. But there's reason to believe that could change. The Fed's decision last week to launch Operation Twist is aimed at lowering longer-term rates to encourage longer-term investments, including equipment and property. While certain sectors of the real estate market like office and commercial space are more volatile, residential and apartment REITs may play right into the Fed's hand.

There are other reasons to like residential REITs. For one, residential REITs have returned 3.5% over the past five years, compared to a 0.78% annualized loss for the Standard & Poor's 500 stock index. And according to S&P research, apartment REITs are back on the market looking to snap up properties -- a move that could further boost returns as vacancy rates decrease and rents rise.

 

Experts Explain: What is 'Operation Twist?'

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The Fed announced that it will use a strategy from the '60s to try to boost the economy.

Of course, investing in real estate -- even through ETFs -- has its drawbacks. Residential REITs, such as publicly traded giants AvalonBay Communities (AVB) or Equity Residential (EQR), were particularly volatile going into and coming out of the financial crisis. And, since REITs are required to pass on at least 90% of their taxable income to shareholders, ETFs holding REITs pay fully taxable dividends; that means the best way to buy these funds is for a tax-advantaged accounts such as an IRA or 401(k).

In addition, it's unclear that the Fed's unconventional step will work. With mortgage rates already at their lowest level in decades, economists are divided over whether any slight decrease would push more Americans to borrow again. Applications for home purchases are currently at a 15-year low.

But for investors who believe this Fed move just might work, one ETF stands to benefit the most. The $145 million iShares FTSE NAREIT Residential Plus Capped Index Fund (REZ) is 50% invested in multi-family residential homes and also has large holdings in health care and public storage REITs. Think consumer living and service facilities as opposed to commercial, retail, industrial or mortgage REITs. While most money over the past few months has been going to short REIT ETFs, this fund has actually added $5 million in new investor money, according to data provider Index Universe.

Few other REIT ETFs offer as much exposure to the U.S. residential or apartment market. Of the broad-based REIT ETFs, Vanguard REIT (VNQ) -- which tracks the MSCI U.S. REIT Index -- is 19.5% residential. SPDR Dow Jones REIT (RWR) is 18.7% residential and iShares Dow Jones U.S. Real Estate Fund (IYR) is 16% residential. The PowerShares Active U.S. Real Estate Fund (PSR) is 17.7% residential REIT but, due to its active management, has a more flexible portfolio.