Vanguard's VNQI or Xtrackers' HAUZ: Which Real Estate ETF Fits Your Stage?

The Vanguard Global ex-U.S. Real Estate ETF offers a significantly higher dividend yield and a larger asset base. At the same time, the Xtrackers International Real Estate ETF offers a slightly more cost-efficient way to access international property markets.

Investors seeking to diversify their income streams away from U.S. interest rate cycles often compare VNQI and HAUZ. Both funds offer exposure to developed- and emerging-market property stocks, excluding the United States, targeting real estate investment trusts and operating companies to capture international growth and income.

Snapshot (cost & size)

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-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

HAUZ is slightly more affordable with its 0.1% expense ratio. However, VNQI may appeal to income seekers, as its 4.7% trailing 12-month distribution yield significantly outpaces Xtrackers' 3.6% payout.

Performance & risk comparison

What's inside

The Vanguard Global ex-U.S. Real Estate ETF provides comprehensive exposure to international property markets across more than 30 countries. Its portfolio leans heavily toward Real Estate at 98%, with minor allocations to Industrials at 1% and Consumer Cyclical at 1%. With 682 holdings, its largest positions include Goodman Group (ASX:GMG) at 4.22%, Mitsubishi Estate Co Ltd at 2.97%, and Mitsui Fudosan Co Ltd (TSE:8801) at 2.44%. The fund was launched in 2010. Vanguard Global ex-U.S. Real Estate ETF has paid $2.16 per share over the trailing 12 months, which, at its recent ~$45.65 share price, works out to a 4.7% yield.

The Xtrackers International Real Estate ETF tracks the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index. Its sector allocation includes Real Estate at 96%, Industrials at 1%, and Communication Services at 1%. The fund is more concentrated than its Vanguard peer, which has 415 holdings. However, its top positions are similar, including Goodman Group at 4.82%, Mitsubishi Estate Co Ltd at 3.15%, and Mitsui Fudosan Co Ltd at 2.77%. It was launched in 2013. Xtrackers International Real Estate ETF has paid $0.82 per share over the trailing 12 months, which, at its recent ~$22.96 share price, works out to a 3.6% yield.

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Which looks like the better buy

Both funds are still slightly underwater over the past five years, having clawed back most but not all of a steep 2022 drawdown, so buying either one now is a bet that international real estate continues its recovery within your holding period rather than a bet on a rebound already fully priced in. With that assumption in mind, the more useful lens for choosing between HAUZ and VNQI isn't performance; it's where you are in your investing life. For investors still in the accumulation phase, reinvesting distributions rather than spending them makes HAUZ's slight cost edge more relevant, since cost drag compounds over decades even when the gap is small. For retirees drawing income, VNQI is the better fit. Its yield runs nearly a full point higher, and pulling that income directly from distributions means selling fewer shares to cover living expenses. That's important since drawing down a smaller number of shares reduces the risk of being forced to sell into a downturn, a risk that's more pointed here given neither fund has fully recovered yet. There's no universal answer here: HAUZ makes more sense for investors still building wealth, while VNQI makes more sense for those living off it. The choice comes down to where you are in that cycle, not which fund is objectively better.

Seena Hassouna has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.