Investing in REIT ETFs

Best REIT ETFs

These 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 via dividend payments to remain in compliance with IRS regulations. REITs require less work and capital than buying a property outright. They're also less risky, highly liquid, and have historically delivered strong performances versus the S&P 500.

However, with almost 200 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 a dividend cut.

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

Here's a closer look at these top REIT ETFs.

1. Vanguard Real Estate ETF

The Vanguard Real Estate ETF is a behemoth among REIT ETFs, with about $33 billion in assets under management (AUM), more than four times its nearest competitor. It invests in REITs and other real estate stocks. In late 2025, the ETF held more than 150 real estate stocks, led by the following five:

1. Vanguard Real Estate II Index Fund: 14.5% of the portfolio
2. Welltower (WELL -2.09%): 6.6%
3. Prologis (PLD +0.31%): 6.0%
4. American Tower (AMT -2.76%): 5.1%
5. Equinix (EQIX -2.69%): 4.3%

This broad REIT ETF offers investors several forms of diversification. Of its more than 150 stocks, its largest holding is a related REIT index fund that also holds shares of more than 150 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 some diversification across property types.

Overall, its 10 largest holdings make up more than 50% of its portfolio. As a result, it also focuses on the largest REITs that dominate the industry.

One factor that sets the Vanguard Real Estate ETF apart from others is its ETF expense ratio. At 0.13%, it's far less than the industry average of 0.22% of similar funds, enabling investors to keep more of their returns -- and those returns have included the REIT ETF's enticing dividend yield of around 3.6% in late 2025.

3. Schwab US REIT ETF

This ETF provides simple access to REITs since it only holds those entities, unlike other ETFs that include non-REIT real estate stocks in their portfolio. It had more than 120 REITs in the fund as of late 2025, led by the following five:

1. Welltower: 9.1%.
2. Prologis: 8.7%. 
3. American Tower: 6.1%
4. Equinix: 5.0%. 
5. Simon Property: 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. Meanwhile, its top 10 make up about 50% of its portfolio.   

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 a lucrative dividend income (3.0% dividend yield over the trailing 12-month period).

4. Real Estate Select SPDR Fund

The Real Estate Select SPDR Fund allows investors to make a more direct investment in real estate. The ETF only holds REITs in the S&P 500 index, which limits its investment pool. As of late 2025, the ETF held only 30 REITs, led by some familiar names:

1. Welltower: 10.1%.
2. Prologis: 9.6%.
3. American Tower: 7.0%.
4. Equinix: 6.8%.
5. Simon Property: 4.7%.

As the five largest REITs, it's no surprise to see this group leading the way. And because this ETF concentrates only on REITs in the S&P 500, its top 10 holdings made up more than 60% 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 3.4% dividend yield (on a trailing 12-month basis).

5. iShares Select U.S. REIT ETF

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

However, these 30 include some familiar names, led by:

1. Prologis: 9.3%
2. Welltower: 9.3%
3. Equinix: 8.3%
4. American Tower: 6.7%
5. Digital Realty Trust: 5.4%

Overall, its top 10 holdings made up more than 60% of its portfolio as of mid-2025.

Because the ETF takes a more active approach to investing in REITs, it charges a relatively higher expense ratio of 0.32%. It also offered a lower dividend yield (2.5% 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. 

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 provide broad diversification across the entire REIT sector, which can help lower your portfolio's risk profile.
• 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 (ETF expense ratio), which can eat into an investor's returns.

FAQ