HAUZ vs. VNQI: How Do These Two Real Estate ETFs Compare on Yield, Cost, and Performance?

Vanguard Global ex-U.S. Real Estate ETF (NASDAQ:VNQI) and Xtrackers International Real Estate ETF (NYSEMKT:HAUZ) both target international real estate, but HAUZ edges ahead with a marginally lower fee, higher recent return, and a more concentrated real estate sector tilt.

Both VNQI and HAUZ offer exposure to real estate stocks outside the United States, appealing to investors seeking diversification in global property markets. This comparison looks at cost, performance, risk, sector makeup, and portfolio quirks to help clarify which may better align with various investment goals.

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 comes in slightly more affordable on fees at 0.10% compared to VNQI’s 0.12%, which could appeal to cost-conscious investors. VNQI offers a modestly higher dividend yield at 4.6%, edging out HAUZ’s 4.4% payout.

Performance & risk comparison

What's inside

HAUZ targets the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index, resulting in an ultra-focused real estate portfolio: 96% real estate, 412 holdings, and just 2% in industrials and 1% in communication services. Its largest weights go to Goodman Group (ASX:GMG), Mitsubishi Estate Co Ltd (OTC:MITEY), and Mitsui Fudosan Co Ltd (OTC:MTSFY), with the fund in existence for 12.5 years and no notable quirks such as leverage or hedging.

VNQI, by contrast, spreads its bets across 682 holdings with 80% real estate exposure, but holds a higher allocation to cash and other assets (16%) and a minor tilt to financial services. Its top names overlap with HAUZ, featuring Mitsubishi Estate Co Ltd, Goodman Group, and Mitsui Fudosan Co Ltd, but with slightly lower individual weights. Both funds offer broad, index-based international property exposure with subtle differences in sector concentration.

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What this means for investors

For those investors who want to build or increase their exposure to the real estate sector, both Vanguard Global ex-U.S. Real Estate ETF (VNQI) and Xtrackers International Real Estate ETF (HAUZ) are exchange-traded funds (ETFs) to consider. Here’s how they measure up to one another.

Let’s start with VNQI, which is one of the world’s largest real estate ETFs. Like many real estate ETFs, if focuses on real estate investment trusts (REIT), however this fund has an international focus, which might be appealing to investors seeking to diversify their real estate exposure.

In the head-to-head matchup, VNQI boasts a slightly higher dividend yield (4.6% vs. 4.4%). It also has a significantly higher AUM ($4.2 billion vs. $1.0 billion). This higher AUM makes it easier for investors to buy and sell shares by keeping the bid/ask spread tight for ETF shares.

Turning to HAUZ, it has the edge in several key respects. HAUZ has a slightly lower expense ratio (0.10% vs. 0.12%). It also has a better one-year and five-year performance history.

In summary, cost-conscious investors may favor HAUZ, which has also demonstrated better short and long-term performance. Those investors focused strictly on income may select VNQI given its higher dividend yield, along with those who value greater liquidity.

Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goodman Group. The Motley Fool has a disclosure policy.