Direct Answer
REIT ETFs provide real estate exposure without direct property ownership. Vanguard Real Estate ETF (VNQ, 0.12%) is the largest with over $70 billion in AUM. Schwab U.S. REIT ETF (SCHH, 0.07%) is the cheapest option. iShares U.S. Real Estate ETF (IYR, 0.40%) is the most actively traded but most expensive. REITs must distribute 90% of taxable income, making them high-dividend instruments.
REIT ETF Comparison: VNQ vs SCHH vs IYR
REIT ETF Comparison
| Ticker | Name | Expense Ratio | Yield (approx) | AUM | Holdings |
|---|---|---|---|---|---|
| VNQ | Vanguard Real Estate | 0.12% | ~4.0% | ~$70B | ~160 REITs |
| SCHH | Schwab US REIT | 0.07% | ~3.8% | ~$6B | ~120 REITs |
| IYR | iShares US Real Estate | 0.40% | ~3.5% | ~$5B | ~80 REITs + real estate companies |
| XLRE | SPDR S&P Real Estate Sector | 0.09% | ~3.5% | ~$5B | S&P 500 real estate stocks only |
| VNQI | Vanguard Global ex-US Real Estate | 0.12% | ~4.5% | ~$6B | International REITs |
| REET | iShares Global REIT | 0.14% | ~4.2% | ~$3B | Global REITs |
Source: Vanguard: VNQ ETF. Last verified: September 2026.
Frequently asked questions
Are REITs a good investment?
REITs have historically provided competitive total returns (approximately 10-11% annually, similar to equities) with above-average income (yields of 3-5%). They offer diversification from traditional stocks and bonds, as real estate returns depend on different factors (rental income, property values, interest rates). The main risks: REITs are sensitive to interest rate changes (higher rates reduce REIT valuations and increase their borrowing costs); they have high correlation with equities during market crashes; and they have tax disadvantages in taxable accounts (REIT dividends are ordinary income, not qualified dividends). Most financial plans allocate 5-15% to real estate.
How do REITs make money?
REITs (Real Estate Investment Trusts) own income-producing real estate and must distribute at least 90% of taxable income as dividends. They earn income from: (1) rent from tenants (commercial, residential, industrial, healthcare, data centers, cell towers); (2) mortgage interest (mortgage REITs); (3) capital gains from property sales. REITs come in many flavors: equity REITs own physical properties; mortgage REITs (mREITs) own mortgages and MBS; hybrid REITs own both. Equity REITs dominate VNQ and are more stable; mREITs (like AGNC, NLY) are higher-yield but much more volatile.
What happened to REITs in 2022?
VNQ fell approximately 26% in 2022, worse than the overall S&P 500 (-18%). Rising interest rates hurt REITs on multiple fronts: higher rates make bonds relatively more attractive versus REIT dividend yields (reducing REIT valuations); higher rates increase REIT financing costs on floating-rate debt; and recession fears reduced outlook for commercial real estate. Office REITs were additionally hurt by post-pandemic work-from-home trends reducing office demand. REIT recovery in 2023 was mixed: industrial, residential, and data center REITs recovered faster than office and retail.
Worked Example: What the Expense Gap and the Yield Mean on $10,000
Take $10,000 held for ten years in a REIT portfolio returning a hypothetical 8% a year before costs. At SCHH's 0.07% expense ratio the ending value is about $21,450; at VNQ's 0.12% it is about $21,351; at IYR's 0.40% it is about $20,803. The cheapest and the most expensive fund in the table end $647 apart on the same assumed gross return, with no difference in what they owned driving it.
The yield column matters most in a taxable account. At VNQ's approximate 4.0% yield, $10,000 pays about $400 a year; because REIT distributions are generally taxed as ordinary income rather than as qualified dividends, a holder at a 24% marginal rate keeps about $304 of it, where the same $400 of qualified dividends at a 15% rate would leave $340. That $36 a year difference on $10,000 is why the FAQ's advice to hold REIT funds in tax-advantaged accounts is about the yield, not the expense ratio. Figures are hypothetical and tax rates vary by filer.
Cite This Page
If you reference this table in your own work, use the following citation format and add the date you accessed it:
Swoopr Editorial Team. (2026). REIT ETF Comparison: VNQ vs SCHH vs IYR. Swoopr Investment. https://www.getswoopr.com/tables/etf/reit-etf-comparison/
Check the figures against the primary sources listed under References before you rely on or republish them; the series they come from are revised.