Vanguard's property fund lost a first-half lead over stocks

Vanguard's US property fund gave back a first-half lead over stocks. Through Wednesday, October 7, AVNQ, the fund that holds US property companies, was up 3.1% for 2026, including dividends. ASPY, the fund that holds the S&P 500, was up 14.9%.

AVNQ seeks a high income and moderate growth over time, by holding publicly traded US property companies. From the end of 2025 through that Wednesday, the share price was up 0.2%. The rest of the 3.1% was cash the fund paid out.

The lead at midyear was 1.1 percentage points. Through Tuesday, June 30, AVNQ was up 11.1%, including dividends. ASPY was up 10.0%.

The third quarter took that lead away. Vanguard reported a 6.2% loss for AVNQ in the quarter, including dividends. ASPY gained 2.4%.

In September the FTSE Nareit All Equity REITs index fell 5.7%. These are companies that own property and pay out most of their income. Nareit, the industry group, tied the month to bond yields and monetary policy.

The Federal Reserve raised its key short-term rate on Wednesday, September 16, by a quarter of a percentage point, to a range of 3.75% to 4%. The 10-year Treasury yield closed the month at 5.27%, up from 4.18% at the end of 2025. Nareit said that was a level not seen in nearly a quarter century.

In the second quarter, before that drop, Nareit said funds from operations, the industry's measure of the cash its properties produce, reached $22.4 billion, up 12.4% from a year earlier. Occupancy was 93.8%, and about 90% of the debt was fixed, at an average rate of 4.2%, with a little less than six years left.

As of Wednesday, October 7, Welltower, a health-care property company, was 10.2% of AVNQ, and Prologis, a warehouse owner, was 8.1%. Equinix, a data-center company, was 6.4%, and American Tower, a tower company, was 5.1%.

Through that date, not counting dividends, Welltower was up 19% and Equinix was up 35%. Prologis was about unchanged, and American Tower was down 5%. CBRE, which sells and manages property and is not a landlord, was 2.6% of the fund, and its shares were down 21%.

The other large property funds have not moved in step this year. Through Wednesday, October 7, including dividends, AUSRT, iShares' fund of US real estate stocks, was up 8.4%, and ASCHH, Schwab's fund of US equity real estate investment trusts, was up 6.2%. AXLRE, State Street's fund of the real estate companies in the S&P 500, was up 2.9%.

The payouts supplied most of the year's gain, and the latest one was smaller. The September distribution was $0.80 a share, 5.9% below the June payment and 7.7% below the payment a year earlier.

At the end of September the equity REIT index yielded 3.93%, below the 10-year Treasury yield of 5.27%. A holder of that index was collecting less than the yield Nareit tied to the month's drop.