VNQ vs XLRE

VNQAVanguard Real Estate ETF

XLREAState Street Real Estate Select Sector SPDR ETF

In short

VNQ The 2004 original in US listed real estate: one ticker for nearly the whole property market, from the biggest landlords down to small ones, at a fraction of the typical sector fee.

XLRE The S&P 500's landlords in one ticker: about 30 large-cap real estate companies, mortgage REITs excluded, for 0.08% a year. It launched in 2015, before real estate was even its own market sector.

Stated mandate

VNQ The fund seeks high income and moderate long-term capital appreciation by tracking an index of publicly traded equity REITs and other U.S. real-estate-related investments.

XLRE The fund seeks to provide investment results that generally correspond to the price and yield performance of the Real Estate Select Sector Index, representing the real estate sector of the S&P 500 Index.

Why people hold it

• VNQ 0.13% a year versus a peer-group median of 0.37%. On a sector fund, the fee is the part you actually control.
• Full replication of the MSCI US IM Real Estate 25/50 Index: about 160 names, and the 25/50 rules cap how big any single issuer can get.vanguard.com
• A multi-tens-of-billions fund and one of the most actively traded in its category, so entering and exiting rarely means fighting the spread.
• Income is the stated mandate: high income plus moderate long-term capital appreciation from listed REITs, paid out quarterly, with Vanguard running it since 2004.vanguard.com

• XLRE 0.08% a year sits at the floor of the real estate peer group, where the median fund charges several times more.
• Clean mandate: S&P 500 real estate management, development and equity REITs, with mortgage REITs left out, so no mortgage paper rides along in a property fund.ssga.com
• A multi-billion-dollar fund and one of the most actively traded names in its category, which usually shows up as tight spreads when you click buy.
• Running since 2015, arriving before S&P and MSCI split real estate out as its own sector in 2016. Pays quarterly, and ranks among the stronger builds in a crowded lineup.reit.com

Worth knowing

• VNQ Not the cheapest shelf in the aisle. SCHH charges 0.07% and USRT, FREL and XLRE 0.08%, so a few basis points separate it from its closest rivals.
• One sector, and a rate-sensitive one. REIT borrowing costs and valuations track interest rates, so the ride is bumpier than a total-market fund.vanguard.com
• The index reaches past classic landlords into data-center and other specialized REITs plus real estate services and development firms. Broader than pure property.vanguard.com

• XLRE About 30 holdings, so the largest positions carry real weight and one company's stumble is felt across the fund.
• The S&P 500 sets the universe, so REITs that never reach large-cap index status stay outside the portfolio.ssga.comsec.gov
• This is one slice of the market, moving with the property cycle rather than blending into a broad index.

Full VNQ profile⁠

Full XLRE profile⁠