Are REIT ETFs a good investment?

REIT ETFs can be good investments. They provide investors with diversified exposure across the real estate sector, which has historically delivered attractive total returns. Over the last 25 years, REITs have outperformed the S&P 500 (10.8% to 10.2%), according to Motley Fool Research. In addition, REITs are good inflation hedges and provide dividend income.

What is the largest REIT ETF?

Vanguard Real Estate ETF is the largest REIT ETF, with about $38.2 billion in assets under management in its VNQ share class as of late 2026.

Are REITs still a good investment?

REITs have historically been very good investments over the long term. According to Motley Fool Research on REITs versus stocks, REITs have outperformed stocks over the last 25 years (10.8% vs. 10.3% for the S&P 500). While past success does not guarantee similar returns, REITs could still be a good investment. Falling interest rates, rising demand for certain property types, and dividend income could enable REITs to continue producing attractive returns for investors.

What are the top 5 largest REITs?

The five largest publicly traded REITs by market cap in late 2026 were:Welltower: $170.2 billion.Prologis: $130.2 billion.Equinix: $102.2 billionAmerican Tower: $81.9 billion.Digital Realty: $67.8 billion.

Do REIT ETFs offer capital appreciation or mainly income?

REIT ETFs offer both capital appreciation and income. While REITs pay out the bulk of their taxable income in dividends, they use retained cash flow and other capital sources to grow their portfolios. Those investments in expanding their portfolios through acquisitions and development projects increase their income, enabling REITs to raise dividends. This growth enables REITs to deliver capital appreciation.

Does REIT ETF pay dividends?

Yes, REIT ETFs pay dividends. Most REITs pay dividends, which these funds collect and distribute to their investors, usually quarterly.

How is a REIT ETF different from investing in individual REITs?

A REIT ETF provides broad exposure to a range of REITs in a single fund. That differs from investing in individual REITs, which only provide exposure to the underlying REIT.

Best REIT ETFs for 2026 and How to Invest

A closer look at some of the best REIT ETFs.

By Matthew DiLallo – Updated Sep 6, 2026 at 8:52 AM EST | Fact-checked by Frank Bass

Key Points

REIT ETFs offer diversified investment in real estate with less risk and more liquidity than other real estate investments.
Vanguard Real Estate ETF leads the way with $38.2 billion in AUM and a low expense ratio of 0.13%.
REITs have historically outperformed the S&P 500 over the long term with a 10.8% average annual total return over the past 25 years.

Real estate investment trust (REIT) exchange-traded funds (ETFs) invest broadly in the real estate sector. They hold in several REITs, making it easy for anyone to invest in a diversified pool of wealth-creating commercial real estate.

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An infographic defining and explaining real estate investment trust (REIT) exchange-traded funds (ETFs). — Image source: The Motley Fool.

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Here's a closer look at some of the top REIT ETFs.

Top five REIT ETFs

REITs own pools of rental properties or real estate-backed loans that generate rental or interest income. They must distribute at least 90% of their taxable net income to shareholders through dividend payments to remain compliant with IRS regulations. REITs require less work and capital than buying a property outright. They're also less risky and highly liquid. Additionally, according to Motley Fool research based on Nareit data, REITs have delivered an annualized total return of 10.8% over the last 25 years, compared to 10.3% by the S&P 500.

However, with around 180 publicly traded REITs focused on a dozen property sectors, it can be challenging for beginning investors to know where to start. While you could invest in individual REITs, you risk picking the wrong ones that are at risk of underperformance or a dividend cut.

That's where ETFs can help. These entities hold several REITs and other real estate stocks, providing investors with broad exposure to the sector and helping to reduce risk. Some of the top real estate ETF options are:

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Ticker Information Table
Company name	Company ticker	Current price
Vanguard Real Estate ETF	NYSEMKT:VNQ	$96.02
iShares Trust - iShares U.s. Real Estate ETF	NYSEMKT:IYR	$102.14
Schwab Strategic Trust - Schwab U.s. REIT ETF	NYSEMKT:SCHH	$23.45
Select Sector SPDR Trust - State Street Real Estate Select Sector SPDR ETF	NYSEMKT:XLRE	$43.93
iShares Trust - iShares Select U.s. REIT ETF	NYSEMKT:ICF	$66.94

Data as of Sep 6, 2026. Showing 5 of 5 total entries.

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1. Vanguard Real Estate ETF

NYSEMKT: VNQ

Vanguard Real Estate ETF

Today's Change

(-0.66%) $-0.64

Current Price

$96.02

Key Data Points

AUM

$73B

Dividend Yield

3.62%

Expense Ratio

0.13%

Top Holdings

WELL

9.92%

PLD

8.17%

EQIX

6.10%

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The Vanguard Real Estate ETF has roughly $38.2 billion in assets under management (AUM) in this share class (TICKER:VNQ) and around $73 billion in total net assets across its Investor and Admiral REIT mutual fund share classes. That makes it the largest REIT ETF by a significant margin (Schwab U.S. REIT ETF ranks second at over $11 billion in AUM). It invests in REITs and other real estate stocks.

In late 2026, the ETF held 140 real estate stocks, led by the following five:

Vanguard Real Estate II Index Fund: 14.4% of the portfolio
Welltower (WELL -2.05%): 8.5%
Prologis (PLD -0.73%): 7.0%
Equinix (EQIX -0.47%): 5.2%
American Tower (AMT -1.07%): 4.2%

This broad REIT ETF offers investors two forms of diversification. Of its 140 holdings, its largest one is a related REIT index fund that also holds shares of around 140 REITs and real estate stocks. Meanwhile, its other top five holdings include the biggest REITs by market cap. This list features the largest industrial REIT (Prologis), the top infrastructure REIT (American Tower), the leading data center REIT (Equinix), and the biggest healthcare REIT (Welltower). That gives investors broad diversification across property types.

Overall, its 10 largest holdings make up nearly 55% of its portfolio. That focuses on the largest REITs that dominate the industry.

One factor that sets the Vanguard Real Estate ETF apart from others is its expense ratio. At 0.13%, it's far below the industry average of 0.22% for similar funds, enabling investors to keep more of their returns -- and those returns have included the REIT ETF's enticing dividend yield of nearly 3.5% in late 2026.

2. iShares U.S. Real Estate ETF

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NYSEMKT: IYR

iShares Trust - iShares U.s. Real Estate ETF

Today's Change

(-0.72%) $-0.74

Current Price

$102.14

Key Data Points

AUM

$4.4B

Dividend Yield

2.22%

Expense Ratio

0.37%

Top Holdings

WELL

11.43%

PLD

9.12%

DLR

4.69%

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The iShares U.S. Real Estate ETF invests in domestic real estate stocks and REITs. The ETF, managed by BlackRock (BLK -0.34%), had nearly $4.4 billion in AUM across 60 real estate holdings in late 2026, led by the following five:

Welltower: 11.4% portfolio weighting
Prologis: 9.0%
Digital Realty (DLR +0.32%): 4.8%
Equinix: 4.5%
Simon Property Group (SPG -0.98%): 4.5%.

Those are five of the largest REITs, operating across several property types, including industrial, data centers, healthcare, and retail. Overall, the ETF's 10 largest holdings account for over 53% of its portfolio, providing investors with diversification similar to Vanguard's ETF, even though it has fewer holdings.

One drawback of this REIT ETF is its expense ratio. At 0.37%, it's well above the industry average, so it has slightly underperformed its benchmark over the years as the higher fee has eaten into its returns.

The higher fee also eats into the REIT ETF's dividend income. It has a 2.2% dividend yield (as of late 2026, over the trailing 12-month period).

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3. Schwab U.S. REIT ETF

NYSEMKT: SCHH

Schwab Strategic Trust - Schwab U.s. REIT ETF

Today's Change

(-0.68%) $-0.16

Current Price

$23.45

Key Data Points

AUM

$11B

Dividend Yield

2.82%

Expense Ratio

0.07%

Top Holdings

WELL

11.26%

PLD

8.67%

DLR

4.58%

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The Schwab U.S. REIT ETF provides simple access to REITs. It holds only REITs, unlike other ETFs that may hold some non-REIT real estate stocks. The fund had $11.2 billion in AUM across 120 REITs as of late 2026, led by the following five:

Welltower: 11.3%.
Prologis: 8.7%.
Digital Realty: 4.6%.
Simon Property: 4.6%
American Tower: 4.3%

Like many other REIT ETFs, the Schwab fund holds REITs based on their market cap instead of using an equal weighting system, so its top holdings are almost identical to those of most other top REIT ETFs. Its top 10 make up nearly 52% of its assets.

Its expense ratio stands out. It's an ultra-low 0.07%, allowing investors to keep more of the returns from the underlying REITs. That includes its lucrative dividend income (a 2.7% yield over the last 12 months).

4. State Street Real Estate Select Sector SPDR ETF

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NYSEMKT: XLRE

Select Sector SPDR Trust - State Street Real Estate Select Sector SPDR ETF

Today's Change

(-0.72%) $-0.32

Current Price

$43.93

Key Data Points

AUM

$8.3B

Dividend Yield

3.20%

Expense Ratio

0.08%

Top Holdings

WELL

11.63%

PLD

8.96%

EQIX

7.02%

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The State Street Real Estate Select Sector SPDR ETF enables investors to target the largest REITs. The ETF holds only real estate stocks in the S&P 500, limiting its investment universe. As of late 2026, the ETF held $8.3 billion in AUM across 30 holdings, led by some familiar names:

Welltower: 11.6%.
Prologis: 9.0%.
Equinix: 7.0%.
American Tower: 5.6%.
Digital Realty: 5.0%.

Given that they are the five largest REITs, it's no surprise that this group is leading the way. And because this ETF concentrates on real estate stocks in the S&P 500, its top 10 holdings accounted for over 61% of its portfolio. That makes it an ideal option for investors seeking to focus on the largest REITs.

The ETF has a low expense ratio of 0.08%. Consequently, it's a solid option for investors seeking low-cost exposure to the biggest REITs. The fund pays attractive dividends, which drives the REIT ETF's roughly 3.2% dividend yield (on a trailing 12-month basis).

5. iShares Select U.S. REIT ETF

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NYSEMKT: ICF

iShares Trust - iShares Select U.s. REIT ETF

Today's Change

(-0.74%) $-0.50

Current Price

$66.94

Key Data Points

AUM

$2.0B

Dividend Yield

2.48%

Expense Ratio

0.32%

Top Holdings

WELL

8.29%

PLD

8.15%

EQIX

8.06%

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The iShares Select U.S. REIT ETF is another BlackRock-managed REIT ETF. It takes a slightly different approach to investing in REITs, focusing on large real estate companies that dominate their respective property categories. As a result, it has a concentrated portfolio of 30 REITs.

That list includes some familiar names, led by:

Welltower: 8.3% weighting in the fund.
Equinix: 8.1%
Prologis: 8.1%
American Tower: 7.2%
Simon Property Group: 5.9%

Overall, its top 10 holdings made up nearly 60% of its $2 billion in AUM as of late 2026.

Because the ETF takes a more active approach to REIT investing, it charges a relatively higher expense ratio of 0.32%. It also offered a lower dividend yield (2.4% on a trailing 12-month basis). It's best for investors who want to focus on the dominant REITs without limiting themselves to only those in the S&P 500.

How to invest in REIT ETFs

Open your brokerage app: Log in to your brokerage account where you handle your investments.
Search for the ETF: Enter the ticker or company name into the search bar to bring up the ETF's trading page.
Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
Submit your order: Confirm the details and submit your buy order.
Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

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How REIT ETFs work

REIT ETFs work by pooling investor capital to invest broadly across REIT sectors. Many REIT ETFs track a common REIT index by investing in the REITs held by that index to match its returns. Other ETFs take a more active approach, investing in REITs that their management teams believe will deliver the highest returns.

REIT ETFs hold equity in REITs, entitling them to capital appreciation and dividend income. Most REIT ETFs distribute dividends to investors each quarter.

Benefits and drawbacks of investing in REIT ETFs

Investing in REIT ETFs has its share of pros and cons. Some of the benefits include:

Diversification: They offer broad diversification across the entire REIT sector, which can help lower your portfolio's risk.
Income: REITs pay dividends, which REIT ETFs distribute to investors each quarter.
Capital appreciation potential: REITs can deliver price appreciation as they grow their portfolios, earnings, and dividends.

On the other hand, REIT ETFs have some cons, such as:

Underperformance potential: REIT ETFs can underperform the share prices of the top REITs.
Costs: REIT ETFs charge investors a management fee (expense ratio), which can eat into returns.

What to Consider Before Investing in REIT ETFs

Here are some key factors investors should evaluate when choosing REIT ETFs:

Whether you want to invest in a REIT ETF that passively tracks a REIT index or is a more actively managed fund.
Its expense ratio versus other funds.
The ETF's historical track record.
Its size compared to other REIT ETFs.

These ETFs make it easy to invest in REITs

REITs have historically generated attractive total returns for investors by providing them with above-average dividend income and price appreciation. With so many great REITs to choose from, it can be hard for investors to determine which are best for their portfolio. That's where REIT ETFs can help. They make it easy to invest in the sector by providing broad exposure to the leading REITs. Although most REIT ETFs have similar top holdings, the best ones offer unique spins, giving investors several excellent options.

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FAQ on REIT ETFs

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About the Author

Matt DiLallo has been a contributing Motley Fool stock analyst specializing in the energy, industrials, and real estate sectors since 2012. He also covers dividend-paying stocks, pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

TMFmd19

@MatthewDiLallo

Matt DiLallo has positions in American Tower, Equinix, Prologis, Realty Income, and Simon Property Group. The Motley Fool has positions in and recommends American Tower, Equinix, Prologis, Realty Income, and Simon Property Group. The Motley Fool has a disclosure policy.

Best REIT ETFs for 2026 and How to Invest

A closer look at some of the best REIT ETFs.

Key Points

Top five REIT ETFs

1. Vanguard Real Estate ETF

Key Data Points

2. iShares U.S. Real Estate ETF

Key Data Points

3. Schwab U.S. REIT ETF

Key Data Points

4. State Street Real Estate Select Sector SPDR ETF

Key Data Points

5. iShares Select U.S. REIT ETF

Key Data Points

How to invest in REIT ETFs

How REIT ETFs work

Benefits and drawbacks of investing in REIT ETFs

What to Consider Before Investing in REIT ETFs

These ETFs make it easy to invest in REITs

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FAQ on REIT ETFs

Are REIT ETFs a good investment?

Are REIT ETFs a good investment?

What is the largest REIT ETF?

What is the largest REIT ETF?

Are REITs still a good investment?

Are REITs still a good investment?

What are the top 5 largest REITs?

What are the top 5 largest REITs?

Do REIT ETFs offer capital appreciation or mainly income?

Do REIT ETFs offer capital appreciation or mainly income?

Does REIT ETF pay dividends?

Does REIT ETF pay dividends?

How is a REIT ETF different from investing in individual REITs?

How is a REIT ETF different from investing in individual REITs?

About the Author

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Top five REIT ETFs

Key Data Points

Key Data Points

4. State Street Real Estate Select Sector SPDR ETF

Key Data Points

5. iShares Select U.S. REIT ETF

Key Data Points

How to invest in REIT ETFs

How REIT ETFs work

Benefits and drawbacks of investing in REIT ETFs

What to Consider Before Investing in REIT ETFs

These ETFs make it easy to invest in REITs

How to Calculate Return on Investment (ROI) in Real Estate

5 Best REIT Mutual Funds for 2026 and How to Invest

Best Stocks to Buy Now: Our Buy-and-Hold Picks for September 2026

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FAQ on REIT ETFs

Are REIT ETFs a good investment?

Are REIT ETFs a good investment?

What is the largest REIT ETF?

What is the largest REIT ETF?

Are REITs still a good investment?

Are REITs still a good investment?

What are the top 5 largest REITs?

What are the top 5 largest REITs?

Do REIT ETFs offer capital appreciation or mainly income?

Do REIT ETFs offer capital appreciation or mainly income?

Does REIT ETF pay dividends?

Does REIT ETF pay dividends?

How is a REIT ETF different from investing in individual REITs?

How is a REIT ETF different from investing in individual REITs?

2. iShares U.S. Real Estate ETF

Key Data Points