REET vs. GQRE: Which Global Real Estate ETF Is the Better Buy?

The FlexShares Global Quality Real Estate Index Fund (NYSEMKT:GQRE) carries a significantly higher expense ratio and historical drawdown than the iShares Global REIT ETF (NYSEMKT:REET), though it may appeal to investors seeking a higher yield.

Both funds provide exposure to global real estate markets, though they utilize different weighting strategies. While REET tracks a broad index of developed- and emerging-market REITs, GQRE applies a quality-focused methodology to its selection process. This comparison highlights how these different approaches impact costs, 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-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

REET is the lower-cost option with an expense ratio of 0.14%. While GQRE’s expense ratio is three times that -- at 0.45% -- it currently provides a higher payout for income-seeking investors, with a dividend yield of 4.3%.

Performance & risk comparison

What's inside

FlexShares Global Quality Real Estate Index Fund (GQRE, launched in 2013) holds 178 securities focused entirely on real estate and REITS -- though it also holds a roughly 2.4% cash position. Its largest positions include American Tower (NYSE:AMT) at 6.0%, Prologis (NYSE:PLD) at 4.3%, and Welltower (NYSE:WELL) at 4.0%. This portfolio reflects GQRE’s quality-based indexing strategy, and the fund has a trailing 12-month dividend yield of 4.3%.

iShares Global REIT ETF (REET, launched in 2014) provides broader diversification with more than 320 holdings, including a comparatively smaller 0.5% cash position. Its largest holdings include Welltower at 8.5%, Prologis at 7.4%, and Equinix (NASDAQ:EQIX) at 5.9%. Compared to GQRE, it offers a broader reach across the global real estate market and a trailing-12-month dividend yield of 3.4%.

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What this means for investors

For investors looking to gain exposure to global real estate, REET and GQRE represent two meaningfully different approaches to the same sector -- and the best choice really depends on what you're trying to accomplish.

Real estate investment trusts -- companies required by law to distribute at least 90% of taxable income to shareholders -- have faced a challenging few years as rising interest rates pressured valuations across the board. REITs are sensitive to rate movements because they carry significant debt loads and compete with bonds for income-oriented investors. With rates beginning to stabilize, many analysts see global REITs as an increasingly attractive space -- particularly for long-term investors willing to ride out short-term volatility.

REET's key advantages are hard to overlook: its 0.14% expense ratio is among the lowest available for global real estate exposure, and its 323-holding portfolio gives investors a genuinely diversified slice of the worldwide REIT market. That broad reach reduces concentration risk and makes it a solid core holding for investors who want real estate exposure without betting too heavily on any one region or company type.

GQRE tells a different story. Its quality-screening methodology means the fund is more selective -- and that selectivity comes at a price, both in its higher 0.46% expense ratio and in its deeper historical maximum drawdown. The tradeoff? A more attractive yield of 4.3% versus REET's comparatively modest 3.4%. For income-focused investors -- retirees or those relying on distributions to fund expenses -- that yield difference might be worth the added cost and volatility.

Both funds share some of the same core names, including Prologis and Welltower, which speaks to how dominant a handful of large-cap REITs have become in the global real estate landscape. But the position weights differ enough that the funds don't move in lockstep. Investors who want the most cost-efficient, broadly diversified option will likely prefer REET. Those willing to pay a bit more for a quality filter and a higher income stream may find GQRE worth a closer look.

Andy Gould has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Tower, Equinix, and Prologis. The Motley Fool has a disclosure policy.