What is the biggest real estate ETF?

As of August 2026, the largest U.S. listed real estate ETF was the Vanguard Real Estate ETF, with more than $38 billion in assets.

How do real estate ETFs differ from REITs?

REITs own and manage portfolios of income-producing properties and must distribute at least 90% of their taxable income to shareholders. Real estate ETFs, on the other hand, are a type of investment fund that can hold REITs along with other real estate-related companies, offering broader exposure.

Can real estate ETFs be used for long-term investing?

Real estate ETFs are well-suited for long-term holds, especially if you focus on low-fee options and reinvest the dividends over time to maximize compounding.

How are dividends from real estate ETFs taxed?

Distributions from real estate ETFs are typically a mix of ordinary income, capital gains, and return of capital. Each component is taxed differently, just as the underlying REITs they hold are.

Is it good to invest in real estate ETFs?

Real estate ETFs can be a smart addition for investors who want steady income and diversification without the hassle of managing physical property. They offer exposure to professionally managed portfolios of income-generating real estate, often with regular distributions. However, like any investment, they can fluctuate in value, so they're best suited for long-term investors comfortable with moderate volatility.

Can real estate ETFs protect against inflation?

To an extent, yes. Real estate often acts as a partial hedge against inflation because property values and rental income tend to rise as prices increase. Many REITs in these ETFs can raise rents or adjust leases, helping their income keep pace with inflation. That said, if inflation drives interest rates sharply higher, real estate ETFs may face short-term pressure from higher borrowing costs.

What fees are associated with real estate ETFs?

Real estate ETFs charge an expense ratio that covers portfolio management, administration, and operating costs. It is expressed as a annualized percentage of your investment, deducted over time on the back end.

4 Best Real Estate ETFs for 2026 and How to Invest

By Tony Dong – Updated Aug 21, 2026 at 2:05 PM EST | Fact-checked by Parker Hicks

Key Points

Real estate ETFs provide broad market exposure and dividend yields without direct property management.
Investors can choose from top ETFs like Vanguard and Schwab for low-cost, diversified real estate investments.
REIT distributions in ETFs are taxed as ordinary income, impacting after-tax returns.

Unlike rental properties, real estate ETFs offer instant diversification, no tenants to manage, no maintenance or repair costs, no mortgages, and no property taxes. You can own real estate ETFs in a brokerage account just like you would with any stock, and you can earn above-average dividend yields.

The diversification of these ETFs is another major advantage over owning a single rental property. One rental concentrates a significant amount of capital in one building, neighborhood, and local housing market, while a real estate ETF can spread your investment across dozens or even hundreds of properties nationwide.

Depending on the fund, that can include apartments, warehouses, shopping centers, healthcare facilities, data centers, self-storage facilities, and other property types, reducing the impact if any single property or real estate segment performs poorly.

Four top real estate ETFs for 2026

Here are some of the best real estate ETFs investors can consider this year, screened for sufficient assets under management (AUM), low expense ratios, and broad diversification.

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Ticker Information Table
Name and ticker	Current price
Vanguard Real Estate ETF (NYSEMKT:VNQ)	$98.50
Schwab Strategic Trust - Schwab U.s. REIT ETF (NYSEMKT:SCHH)	$24.04
iShares Trust - iShares Core U.s. REIT ETF (NYSEMKT:USRT)	$67.12
Select Sector SPDR Trust - State Street Real Estate Select Sector SPDR ETF (NYSEMKT:XLRE)	$45.08

Data as of Aug 22, 2026. Showing 4 of 4 total entries.

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1. Vanguard Real Estate ETF

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NYSEMKT: VNQ

Vanguard Real Estate ETF

Today's Change

(-0.10%) $-0.10

Current Price

$98.50

Key Data Points

AUM

$73B

Dividend Yield

3.53%

Expense Ratio

0.13%

Top Holdings

WELL

9.92%

PLD

8.17%

EQIX

6.10%

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Vanguard Real Estate ETF (VNQ -0.10%) is the largest on the market, with more than $73 billion in total fund assets. The fund also has a mutual fund share class, and charges a 0.13% expense ratio.

This ETF tracks the MSCI US Investable Market Real Estate 25/50 Index and holds a broad portfolio of 140 companies. Despite that diversification, the portfolio still tilts toward large-cap real estate firms, with a median market capitalization of about $36 billion.

Income potential is one of the main attractions. The ETF has an unadjusted effective yield of 3.27% as of August 2026, which reflects the full amount of REIT distributions, including dividend income, return of capital, and capital gains.

When adjusting for those non-income components, the effective yield is closer to 2.60%. Unlike many bond ETFs, Vanguard does not quote a 30-day SEC yield for this fund, though the yield is calculated monthly, as with other stock funds.

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2. Schwab U.S. REIT ETF

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NYSEMKT: SCHH

Schwab Strategic Trust - Schwab U.s. REIT ETF

Today's Change

(-0.08%) $-0.02

Current Price

$24.04

Key Data Points

AUM

$11B

Dividend Yield

2.75%

Expense Ratio

0.07%

Top Holdings

WELL

10.82%

PLD

8.71%

SPG

4.73%

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Schwab U.S. REIT ETF (SCHH -0.08%) stands out for cost. Vanguard is often known for offering some of the cheapest ETFs on the market, but when it comes to real estate funds, Schwab actually has a lower expense ratio at 0.07%.

This ETF tracks the Dow Jones Equity All REIT Capped Index. While the portfolio primarily consists of real estate investment trusts, it also includes a small number of related real estate operating companies and service providers.

Importantly, it excludes mortgage REITs, which behave more like specialty finance companies that earn income by borrowing to invest in mortgage-backed securities rather than owning physical properties.

The portfolio still offers strong income potential. This Schwab REIT ETF pays a 30-day SEC yield of about 3.31% as of August 2026.

Investors should keep taxes in mind, though. Most REIT distributions are taxed as ordinary income rather than qualified dividends, which can reduce after-tax returns when held in a taxable account.

3. iShares Core U.S. REIT ETF

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NYSEMKT: USRT

iShares Trust - iShares Core U.s. REIT ETF

Today's Change

(-0.10%) $-0.07

Current Price

$67.12

Key Data Points

AUM

$4.7B

Dividend Yield

2.54%

Expense Ratio

0.08%

Top Holdings

WELL

8.87%

PLD

7.38%

EQIX

6.31%

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iShares Core U.S. REIT ETF (USRT -0.10%) is another low-cost option for investors seeking broad exposure to the U.S. real estate sector. It is competitive with Schwab’s offering on fees, charging a slightly higher 0.08% expense ratio. The fund is also well-established, with about $4.6 billion in assets under management.

This ETF tracks the FTSE Nareit Equity REITs Index and holds a diversified portfolio of 126 companies. Similar to Schwab’s real estate ETF, it excludes mortgage REITs and focuses instead on equity REITs that own and operate physical properties.

The portfolio is broadly distributed across the sector, though it is largely dominated by healthcare, retail, industrial, and data center REITs, followed by multifamily residential properties. Income potential is also attractive, with the ETF offering a 30-day SEC yield of 2.95% as of August 2026.

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

(0.00%) $0.00

Current Price

$45.08

Key Data Points

AUM

$8.5B

Dividend Yield

3.12%

Expense Ratio

0.08%

Top Holdings

WELL

11.24%

PLD

8.95%

EQIX

7.16%

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State Street Real Estate Select Sector SPDR ETF (XLRE +0.00%) is designed for investors who prefer exposure to the largest and most established real estate companies in the United States.

Unlike the previous ETFs, which hold broad portfolios across the REIT market with some small and mid-cap inclusion, State Street’s real estate ETF is far more concentrated, with just 30 holdings.

That is because it only includes real estate companies that are part of the S&P 500. As a result, the portfolio tilts heavily toward large-cap firms, reflected in its weighted average market capitalization of about $66 billion.

Despite the concentration in blue-chip REITs, income potential remains solid. The ETF offers a 30-day SEC yield of 3.14% as of August 2026.

It is also one of the larger real estate ETFs available, with about $8.5 billion in assets under management, and it maintains a competitive 0.08% expense ratio.

How to invest in real estate ETFs

Open your brokerage account: Log in to your brokerage account where you handle your investments. If you don't have one yet, take a look at our favorite brokers and trading platforms to find the right one for you.
Search for the ETF: Enter the ticker 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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Pros and cons of investing in real estate ETFs

Before investing, it's important to weigh the benefits and drawbacks of real estate ETFs, especially if you're deciding between owning a fund and a physical property.

Pros

Highly liquid: They trade on public exchanges during market hours, just like stocks, with real-time pricing through bid and ask spreads.
Diversified exposure: A single ETF often holds REITs from multiple real estate sectors, and each REIT owns a portfolio of properties. So, you're instantly diversified across asset types and regions.
No mortgage required: You don't need to take out a loan to gain exposure; if you want leverage, you can use margin through your brokerage.
No tenant hassles: There's no screening, managing, or dealing with tenants. Income comes from REIT dividends, not monthly rent checks.
No property taxes or maintenance: You're not directly responsible for the recurring costs associated with physical ownership.

Cons

Market risk: Because they trade like stocks, real estate ETFs are exposed to stock market volatility, even when real estate prices are stable or rising.
Dilution risk: Some REITs may issue new shares to raise capital, diluting existing shareholders' value.
Tax inefficiency: You can't deduct costs such as mortgage interest, property taxes, or depreciation like you could with a rental property, making them less flexible from a tax-planning perspective.

Methodology: How These REIT ETFs Were Chosen

We focused on REIT ETFs that combine low ownership costs with sufficient scale and liquidity for long-term investors. That meant prioritizing competitive expense ratios, substantial assets under management, long operating histories, and healthy trading liquidity. A larger asset base can also reduce the risk of fund closure, while lower fees leave more of the portfolio's real estate income and capital appreciation for shareholders.

Diversification was equally important. We favored ETFs that spread their holdings across multiple property types, such as industrial facilities, apartments, retail properties, healthcare real estate, data centers, and self-storage, rather than making a concentrated bet on a single segment. We also considered dividend yield and portfolio construction, including how heavily each ETF is concentrated in its largest REITs, to balance income potential with company- and property-specific risk.

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How to invest in real estate ETFs: FAQ

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Tony Dong has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Real Estate ETF. The Motley Fool has a disclosure policy.

4 Best Real Estate ETFs for 2026 and How to Invest

Key Points