Comparing the Vanguard Real Estate ETF (NYSEMKT:VNQ) and the State Street Real Estate Select Sector SPDR ETF (NYSEMKT:XLRE) highlights a choice between the Vanguard fund’s broad diversification and the SPDR fund’s low-cost concentration.
Both funds target the U.S. real estate market, primarily through equity Real Estate Investment Trusts (REITs) that offer income and potential capital appreciation. While they share many top holdings, the Vanguard fund casts a wider net across the small- and mid-cap space, whereas the SPDR fund focuses exclusively on large-cap stocks.
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.
The State Street Real Estate Select Sector SPDR ETF is slightly more affordable with an expense ratio of 0.08%, while the Vanguard Real Estate ETF charges 0.13%. However, the Vanguard fund currently offers a higher yield of 3.7%.
Performance & risk comparison
What’s inside
The Vanguard Real Estate ETF primarily invests in equity REITs that manage income-producing properties such as office buildings and hotels. The fund aims to track the MSCI U.S. Investable Market Real Estate 25/50 Index, providing exposure to 139 holdings. Its largest positions include Welltower at 10.23%, Prologis at 8.08%, and Equinix at 6.39%.
It launched in 2004. Vanguard Real Estate ETF has paid $3.47 per share over the trailing 12 months, which, at its recent ~$92.9 share price, works out to a 3.7% yield.
The State Street Real Estate Select Sector SPDR ETF offers a narrower focus by tracking the Real Estate Select Sector Index. This index covers real estate management, development, and equity REITs within the S&P 500, specifically excluding mortgage REITs. Its largest positions include Welltower at 11.19%, Prologis at 8.70%, and Equinix at 6.84%. The fund is more concentrated than the Vanguard fund, holding only 30 stocks.
It launched in 2015. State Street Real Estate Select Sector SPDR ETF has paid $1.41 per share over the trailing 12 months, which, on its recent ~$42.5 share price, works out to a 3.3% yield.
