Vanguard vs. iShares: Which Real Estate ETF Suits Your Portfolio?
Key Points
iShares Select U.S. REIT ETF offers concentrated exposure to 30 U.S. holdings, while Vanguard Global ex-U.S. Real Estate ETF spans more than 700 international positions.
Vanguard's fund features a lower expense ratio of 0.12% and a higher trailing-12-month dividend yield.
iShares' ETF has provided higher one-year total returns but exhibits greater volatility.
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Vanguard Global ex-U.S. Real Estate ETF (NASDAQ:VNQI) offers low-cost, broad international diversification, while iShares Select U.S. REIT ETF (NYSEMKT:ICF) provides concentrated exposure to dominant domestic real estate investment trusts (REITs).
Investing in real estate offers a path to diversification and income, but the geography of those assets matters. The iShares ETF focuses on the heavyweights of the American market, while the Vanguard fund looks abroad to more than 30 different countries. This analysis compares these two strategies to see how concentration, international exposure, and cost impact investors.
Snapshot (cost & size)
| Metric | VNQI | ICF |
|---|---|---|
| Issuer | Vanguard | iShares |
| Expense ratio | 0.12% | 0.32% |
| 1-yr return (as of Jun. 8, 2026) | -0.75% | 12.2% |
| Dividend yield | 4.7% | 2.4% |
| Beta | 0.92 | 1.0 |
| AUM | $3.9 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. Dividend yield is the trailing-12-month distribution yield.
The Vanguard fund is significantly more affordable for long-term holders, sporting an expense ratio of 0.12% compared to the 0.32% charged by the iShares ETF. Income-focused investors may also find the international approach more appealing, as VNQI provides a higher payout with a dividend yield of 4.7%. This represents a yield gap of 2.3 percentage points over the iShares fund's 2.4% yield.
Performance & risk comparison
| Metric | VNQI | ICF |
|---|---|---|
| Max drawdown (5 yr) | (35.80%) | (34.70%) |
| Growth of $1,000 over 5 years (total return) | $895 | $1,152 |
What's inside
The iShares Select U.S. REIT ETF focuses on a narrow portfolio of 30 holdings, providing concentrated exposure to the largest and most dominant U.S. real estate investment trusts. Its largest positions include Prologis (NYSE:PLD) at 8.09%, Equinix (NASDAQ:EQIX) at 7.85%, and American Tower (NYSE:AMT) at 7.77%. Realty Income (NYSE:O), a REIT popular among income investors for its monthly payouts, also earns a spot in the top 10.
This fund, which launched in 2001, manages $2.1 billion in assets under management (AUM). ICF paid out $1.65 per share over the trailing 12 months.
In contrast, the Vanguard Global ex-U.S. Real Estate ETF offers a much broader reach with more than 700 holdings across international markets. Top positions include the Australian firm Goodman Group (ASX:GMG) at 3.94%, alongside Japanese companies Mitsubishi Estate at 3.09% and Mitsui Fudosan at 2.71%. Launched in 2010, Vanguard’s fund tracks the S&P Global ex-U.S. Property Index. VNQI paid out $2.16 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
The Vanguard and iShares ETFs both hold a basket of REITs, but that's basically where the similarities end. VNQI is nearly twice the size in AUM, is considerably cheaper, has a significantly higher yield, and is far more diversified. Sign me up, right? But as smart investors know, sometimes a stock is cheap for a reason.
If you'd bought Vanguard's ETF five years ago, you'd be sitting on a loss now. This is partly reflected in the elevated dividend -- a stock's price and its dividend have an inverse relationship, all things equal. So when the price goes down, the dividend yield rises.
In contrast, an investment in iShares' fund would have made you money. Past performance is no guarantee of future results, of course. But I would opt for an ETF with a better track record and lower yield than a fund with a history of losing money.
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Erin Kennedy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Tower, Equinix, Goodman Group, and Prologis. The Motley Fool has a disclosure policy.
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