Better Real Estate ETF: Vanguard's VNQI vs. iShares' ICF
Key Points
VNQI offers broader global diversification, while ICF is concentrated solely in U.S. real estate.
ICF charges a higher expense ratio and yields less income than VNQI.
ICF’s portfolio is much more concentrated, with only 30 holdings versus VNQI’s 682.
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The Vanguard Global ex-U.S. Real Estate ETF (NASDAQ:VNQI) and iShares Select U.S. REIT ETF (NYSEMKT:ICF) differ most notably in geographic coverage, with VNQI spanning international real estate and ICF focusing strictly on the U.S, plus key contrasts in cost, yield, and portfolio breadth.
VNQI is designed for investors seeking exposure to a wide array of non-U.S. real estate companies, while ICF zeroes in on large U.S. real estate investment trusts (REITs). This comparison looks at their cost, recent returns, risk, liquidity, and what’s inside each portfolio to help clarify which approach may appeal to different investment goals.
Snapshot (cost & size)
| Metric | VNQI | ICF |
|---|---|---|
| Issuer | Vanguard | IShares |
| Expense ratio | 0.12% | 0.32% |
| 1-yr return (as of 2026-03-16) | 18.2% | 8.9% |
| Dividend yield | 4.3% | 2.6% |
| Beta | 0.91 | 1.11 |
| AUM | $4.2 billion | $2.1 billion |
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.
ICF is more expensive to hold, with an expense ratio that is 0.2 percentage points higher than VNQI. VNQI also delivers a higher dividend yield, which may appeal to those prioritizing income.
Performance & risk comparison
| Metric | VNQI | ICF |
|---|---|---|
| Max drawdown (5 y) | -35.76% | -34.75% |
| Growth of $1,000 over 5 years | $817 | $1,117 |
What's inside
ICF is a focused play on the U.S. real estate sector, holding just 30 REITs and tracking established names like Equinix REIT (NASDAQ:EQIX), Welltower (NYSE:WELL), and American Tower REIT (NYSE:AMT). The fund is entirely allocated to real estate, with a heavy tilt toward large, specialized REITs. At over 25 years old, ICF offers a long track record but little diversification outside U.S. property companies.
VNQI takes a much broader approach, with 682 holdings spanning more than 30 countries and sectors such as Japanese and Australian real estate companies like Mitsubishi Estate Co., Goodman Group, and Mitsui Fudosan Co. This global diversification means less exposure to any single market and a wider array of real estate business models.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Investing in real estate ETFs is a good way to generate passive income given the attractive dividend yields. Making a choice between the Vanguard Global ex-U.S. Real Estate ETF (VNQI) and iShares Select U.S. REIT ETF (ICF) depends on your investment goals and appetite for risk.
ICF has a higher expense ratio and lower dividend yield compared to VNQI, but its focus on strictly U.S. real estate offers reduced risk. This can be seen in its lower max drawdown. ICF is a good choice for investors who want a solid, all-around real estate ETF.
VNQI offers broader diversification and a higher dividend yield. Investors get exposure to a variety of international markets, while ICF’s U.S. focus means it is dependent on the one market’s performance. VNQI’s down side is that some foreign markets are riskier to invest in than the U.S. Moreover, currency fluctuations can impact returns. Investors who seek greater diversity at a lower cost, and are comfortable with the higher risk, may prefer VNQI.
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Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Tower and Equinix. The Motley Fool has a disclosure policy.
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