GQRE Offers Higher Yield While HAUZ Is More Affordable

The Xtrackers International Real Estate ETF (NYSEMKT:HAUZ) keeps costs low and covers more international ground. At the same time, the FlexShares Global Quality Real Estate Index Fund (NYSEMKT:GQRE) offers a slightly higher yield and greater U.S. exposure, while both funds display comparable long-term risk profiles.

Both HAUZ and GQRE are designed to give investors access to the real estate sector, but they differ in cost, yield, and geographic composition. This comparison examines how these two real estate ETFs compare on performance, risk, and portfolio composition.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.

HAUZ is considerably more affordable than GQRE, with an expense ratio less than one-fourth as high, while GQRE offers a slightly higher dividend yield by 0.1 percentage point.

Performance & risk comparison

What's inside

GQRE focuses entirely on real estate, with 100% sector allocation, and holds 174 securities. The fund’s top holdings include American Tower Corp Reit Usd 0.01 (NYSE:AMT) at 6.3%, Prologis Inc Reit Usd 0.01 (NYSE:PLD) at 4.3%, and Welltower Inc (NYSE:WELL) at 4.0%, highlighting a strong tilt toward large, U.S.-listed real estate investment trusts (REITs). No notable structural quirks or index-tracking details are disclosed in the available data.

HAUZ, by contrast, holds 413 securities, with 96% in real estate and 1% in communication services. Its largest positions include Goodman Group (ASX:GMG.AX) at 3.8%, Mitsubishi Estate Co Ltd (8802.T) at 3.7%, and Mitsui Fudosan Co Ltd (8801.T) at 3.3%, reflecting a heavier non-U.S. and Asia-Pacific concentration compared to GQRE.

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What this means for investors

Both funds can add income, serve as a decent hedge against inflation, and diversify a stock-heavy portfolio. But HAUZ and GQRE are not equal real estate funds, with key differences in returns and costs.

The advantage for GQRE is that it delivered a higher five-year return: $1,000 grew to over $1,200 (including dividends), while HAUZ grew to $1,039. While GQRE has a higher expense ratio, its focus on U.S. real estate may offer greater stability over HAUZ’s greater diversification across international markets.

Interest rates are showing potential to decline, especially after the Federal Reserve’s two rate cuts last year. The higher one-year return for HAUZ may indicate that its portfolio of international securities is more undervalued following the downturn.

While GQRE offers a higher yield, it’s not enough to offset the cost difference. HAUZ’s expense ratio is 0.35 percentage points lower than GQRE, more than offsetting GQRE’s tenth of a point higher yield.

Overall, both funds are solid real estate ETFs. It boils down to whether an investor wants more international exposure or places greater value on investing in domestic companies. HAUZ can save you money and outperform over the next few years, but GQRE’s focus on quality U.S.-based REITs has its advantages in potentially delivering superior returns over the long term.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Tower and Prologis. The Motley Fool has a disclosure policy.