VNQ vs. REET: Which Real Estate ETF Is the Better Buy for Income Investors?
Key Points
The Vanguard Real Estate ETF (VNQ) focuses on U.S. markets, while the iShares Global REIT ETF (REET) spreads its bets across developed and emerging real estate markets worldwide.
REET has delivered a higher one-year return with a slightly lower maximum drawdown over the last five years.
VNQ carries a slightly lower expense ratio and offers a higher dividend.
- 10 stocks we like better than Vanguard Real Estate ETF ›
The choice between the Vanguard Real Estate ETF (NYSEMKT:VNQ) and the Shares Global REIT ETF (NYSEMKT:REET) centers mainly on geography.
Real estate investment trusts (REITs) give investors a way to tap into property markets without the hassle of managing actual buildings. Both of these funds target the real estate sector, but while VNQ sticks to U.S. companies, REET spans the globe -- including both developed and emerging economies.
Snapshot (cost & size)
| Metric | REET | VNQ |
|---|---|---|
| Issuer | iShares | Vanguard |
| Expense ratio | 0.14% | 0.13% |
| 1-year return (as of Jan. 21, 2026) | 18.94% | 14.48% |
| Dividend yield | 3.36% | 3.60% |
| Beta | 0.99 | 1.00 |
| AUM | $4.9 billion | $71.4 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Both funds feature low fees. VNQ is slightly cheaper -- with a 0.13% expense ratio compared to REET’s 0.14%. VNQ also offers a modestly higher dividend yield for those prioritizing income.
Performance & risk comparison
| Metric | REET | VNQ |
|---|---|---|
| Max drawdown (5 yr) | (32.06%) | (34.50%) |
| Growth of $1,000 over 5 years (total return) | $1,163 | $1,137 |
Over the last five years, REET has posted a higher return than VNQ and has also experienced a somewhat smaller maximum drawdown -- meaning its worst peak-to-trough decline was a bit less severe.
What's inside
Launched in 2004, VNQ focuses on the U.S. market and holds 143 stocks. Its largest positions include the Vanguard Real Estate II Index (NASDAQMUTFUND:VRTPX) at 14.4%, Welltower Inc. (NYSE:WELL) at 8.4%, Prologis Inc. (NYSE:PLD) at 6.7%, and Equinix Inc. (NASDAQ:EQIX) at 5.4%.
REET, by contrast, spreads its exposure across global markets and provides broader diversification with 318 stocks. However, its top holdings include the same three stocks -- Welltower at 8.7%, Prologis at 6.9%, and Equinix at 5.6%. REET was launched in 2014.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Choosing between these two funds boils down to a series of trade-offs. You can pay a bit less and collect a bit more income by staying domestic with VNQ, or accept a slightly lower yield in exchange for broader geographic diversification and REET's recent performance edge.
U.S. REITs have spent much of the past couple of years navigating a higher-interest-rate environment, as rising rates tend to pressure real estate valuations and make borrowing more expensive for property owners. International REIT markets don't always move in lockstep with U.S. rate policy, so REET's slightly smoother ride and stronger recent returns could reflect the fund’s diversification benefit playing out in real time.
REITs as an asset class are generally used for income and diversification rather than explosive growth, and both VNQ and REET deliver on that core promise. REET investors give up a bit of yield and pay a hair more in fees for exposure beyond U.S. borders, while VNQ investors keep things simple, cheap, and concentrated on the world's largest real estate market. For investors who already have international exposure through other holdings, VNQ's lower cost and higher income may be the more efficient choice. Those looking to diversify away from U.S.-specific real estate risks -- such as local interest-rate policy or regional oversupply -- may find REET's global reach worth the small extra cost.
It's also worth noting that REET's diversification benefit isn't as clean as "U.S. vs. global" makes it sound. REET’s three largest holdings -- Welltower, Prologis, and Equinix -- are the exact same names sitting near the top of VNQ's portfolio. That's not a coincidence: these mega-cap REITs are simply large enough to dominate global real estate indexes by default. So an investor buying REET specifically to get away from U.S. real estate exposure is still leaning heavily on the same blue chip American names at the top of the fund. The real diversification shows up further down the list, in REET's long tail of international holdings.
Should you buy stock in Vanguard Real Estate ETF right now?
Before you buy stock in Vanguard Real Estate ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Real Estate ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $370,332!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,272,280!*
Now, it’s worth noting Stock Advisor’s total average return is 904% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 22, 2026.
Andy Gould has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Equinix, Prologis, and Vanguard Real Estate ETF. The Motley Fool has a disclosure policy.
Recommended Articles
