This REIT ETF Remains Prettiest on the Block
Low fees and broad exposure to the commercial real estate market make this fund a solid choice.
REITs have traditionally been viewed as a liquid way to buy commercial real estate and improve a portfolio's diversification, but the sector's investor base has expanded in recent years to include income- and growth-seekers. Vanguard REIT Index ETF (VNQ) is a well-constructed and cheap way to gain access to the REIT space. Vanguard often offers the same fund in mutual fund and ETF share classes, and this fund's mutual fund share class, Vanguard REIT Index (VGSIX), receives a Morningstar Analyst Rating of Gold.
Because most REIT ETFs have very similar holdings, expense ratios are a particularly important consideration when choosing a fund tracking the sector. Vanguard REIT Index's 0.10% expense ratio makes it one of the cheapest options available. It has also tracked its benchmark very closely: VNQ's estimated holding cost, which is a Morningstar data point that measures the difference in performance between a fund and its benchmark, is 0.03%. When a fund's estimated holding cost is very close to its expense ratio, it helps show that the fund is tracking well.
Abby Woodham does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.