Vanguard Real Estate ETFs: VNQI Offers Higher Yield and Global Reach, While VNQ Provides U.S. Exposure
Key Points
VNQI offers broader international diversification and a higher dividend yield compared to VNQ
VNQ is substantially larger, more liquid, and has outperformed over the past five years
Both ETFs have similar risk profiles, but their top holdings and sector concentrations differ markedly
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Vanguard Global ex-U.S. Real Estate ETF (NASDAQ:VNQI) and Vanguard Real Estate ETF (NYSEMKT:VNQ) share similar costs and risk levels, but VNQI delivers a higher yield and global diversification, while VNQ stands out for its massive assets under management and superior five-year total return.
Both Vanguard funds give investors access to real estate equities, but they focus on different geographies: VNQI provides exposure to non-U.S. property markets, while VNQ targets U.S.-listed real estate investment trusts (REITs). This comparison examines cost, yield, performance, risk, sector makeup, and practical differences to help clarify which may better fit a portfolio seeking real estate diversification.
Snapshot (cost & size)
| Metric | VNQI | VNQ |
|---|---|---|
| Issuer | Vanguard | Vanguard |
| Expense ratio | 0.12% | 0.13% |
| 1-yr return (as of 2026-03-16) | 11.7% | 1.3% |
| Dividend yield | 4.6% | 3.7% |
| Beta | 0.71 | 1.02 |
| AUM | $4.2 billion | $69.6 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.
VNQI and VNQ are nearly identical on fees, with VNQI a hair more affordable, but VNQI also delivers a higher dividend yield, which may appeal to those seeking income from global real estate.
Performance & risk comparison
| Metric | VNQI | VNQ |
|---|---|---|
| Max drawdown (5 y) | -35.76% | -34.48% |
| Growth of $1,000 over 5 years | $817 | $1,003 |
What's inside
VNQ invests in 158 U.S.-listed REITs, with a portfolio heavily concentrated in real estate (98%), and small allocations to communication services and technology. Top holdings include Welltower Inc(NYSE:WELL), Prologis Inc(NYSE:PLD), and Equinix Inc(NASDAQ:EQIX), and the fund has a long track record at 21.5 years. This focus may suit investors looking for exposure to the U.S. property market, with the added reassurance of deep liquidity and scale.
By contrast, VNQI spans more than 30 non-U.S. countries and has 682 holdings, offering a mix of real estate (80%), cash and other assets (16%), and some financial services (2%). Leading positions are Mitsubishi Estate Co Ltd(OTC:MITEY), Goodman Group(ASX:GMG), and Mitsui Fudosan Co Ltd (OTC:MTSFY). This international tilt can help diversify a U.S.-centric portfolio, but the fund is much smaller and less concentrated in any single market.
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What this means for investors
For many investors, real estate is a critical part of their portfolio composition. Real estate exchange-traded funds (ETFs) are often the best way to build that exposure. Here’s how two of the most prominent real estate ETFs, Vanguard Global ex-U.S. Real Estate ETF (VNQI) and Vanguard Real Estate ETF (VNQ), both run by Vanguard, matchup in a head-to-head comparison.
First, let’s begin with VNQ. This ETF focuses on the U.S. REIT market. Its main advantages are as follows:
- Size: VNQ has nearly $70 billion in AUM. That makes it one of the largest real estate ETFs around and more than 16x the size of VNQI. This level of AUM means the fund has deep liquidity, so there are no concerns about buying or selling shares, even in volatile markets.
- Geographic concentration: VNQ owns 158 U.S.-based REITs, meaning investors get direct exposure to the American real estate market. For some investors, it’s critical to focus on the domestic real estate market rather than the international one.
- Long-term performance: VNQ has posted a better five-year return than VNQI, with a $1,000 investment growing slightly to $1,003, while a $1,000 investment in VNQI would have shrunk to $813.
Turning to VNQI, this rival fund excels in several key respects.
- Yield: Income is often a key consideration for real estate investors. VNQI boasts a dividend yield of 4.6% vs. 3.7% for VNQ.
- Recent performance: VNQI has posted a one-year return of 11.7% vs. 1.3% for VNQ.
- Lower expense ratio: VNQI has a marginally lower expense ratio of 0.12% compared to VNQ’s 0.13%.
In summary, both VNQ and VNQI should be considered by real estate investors. The ultimate choice between the two will come down to personal preferences and investment priorities.
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Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Equinix, Goodman Group, Prologis, and Vanguard Real Estate ETF. The Motley Fool has a disclosure policy.
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