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Be a Brokerage Real Estate Mogul With These REIT ETFs

Barchart·09/20/2026 06:00:02

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Real estate investment trusts (REITs) are among the best tools that income investors have at their disposal. And REIT ETFs help take these tools to another level.

REITs are the most accessible way to invest in real estate, in both terms of cost (you just need the price of a share) and who's allowed to own them in the first place (they're not restricted to accredited investors). And they also help deliver the stream of consistent income that traditional physical real estate investors can generally expect.

But much like other parts of the stock market, there's some risk involved in owning just one or two REITs. That's where exchange-traded funds (ETFs) come in. A REIT ETF can help you defray that single-ticker risk by spreading your assets across dozens of REITs covering a variety of real estate industries.

Let's look at some of the best REIT ETFs you can buy to bolster your portfolio income. I'll start with an introduction to REITs and how they work, introduce you to some of the top REIT funds on the market, then answer a few questions about REIT dividends, taxation, and more.

Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

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Why Invest in REITs Through ETFs?

One of the greatest benefits of any investment fund, including exchange-traded funds, is that it allows you to diversify your portfolio across a multitude of different investments. You could spend a lot of time researching numerous stocks, then pay however much it costs to buy each stock individually … or you could buy a few dozen, hundreds, or even thousands all at once by owning a single ETF.

So, if you don't want to take the time to research individual REITs, you can put your money into a REIT ETF and leave it up to the portfolio manager or the tracking index.

But real estate investment trusts' portfolios typically are made up of dozens if not hundreds of properties or thousands of mortgages. So do you really need that additional layer of diversification?

REITs usually focus on specific corners of the market: office buildings, hotels, medical facilities, and so on. Even mortgage REITs tend to specialize in certain segments of real estate assets. If you want that specific exposure, individual REITs are just fine.

But if you prefer to collect real estate income without being tethered to merely one real estate industry, REIT ETFs provide that broad-based access.

The following three picks are from my larger list of REIT ETFs.

The Best REIT ETFs You Can Buy

The following funds are some of the best real estate investment trust ETFs on the market.

I've kept screening to a minimum here. All ETFs on this list have a Morningstar Medalist Rating (a forward-looking analytical view of the ETF) of either Bronze, Silver, or Gold, and at least $75 million in assets under management (AUM). I personally love brand-spanking-new funds, but targeting more established ETFs with a certain baseline of assets reduces your risk of purchasing a fund that might eventually close.

Past that, I'm just looking for REITs that come at the sector from different angles. It's normal to see a sizable amount of overlap in REIT fund holdings—the sector itself only holds a couple hundred stocks across all market capitalizations, after all, and most are going to gravitate toward the largest components. Where the following funds differ is in their strategy and approach.

Vanguard Real Estate ETF

Assets under management: $38.1 billion*
Dividend yield: 3.6%
Expense ratio: 0.13%, or $1.30 per year on every $1,000 invested
Morningstar Medalist rating: Gold

Vanguard Real Estate ETF (VNQ) is the 500-pound gorilla of the U.S. real estate space, boasting well more than three times the assets of the second-largest largest ETF.

Normally, I'd point to Vanguard's low expenses as the reason. But in this case, it's the longevity. VNQ's fees, while low compared to the entire field, are still higher than several of its closest competitors. But the fund has had a long time to build up its asset base—VNQ, which got its start in September 2004, is the ETF share class of Vanguard's Real Estate Index Fund, which has been around since May 1996.

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Vanguard's REIT ETF tracks the MSCI US Investable Market Real Estate 25/50 Index, which invests in the real estate stocks from a pretty wide stock selection universe, then weights them by market capitalization. That means the bigger the company, the more assets are allocated to the stock—and the greater influence that stock has over the portfolio's performance. So while VNQ does hold a sprawling portfolio of 139 REITs, it's not evenly balanced. Consider that the top three holdings—healthcare and senior housing landlord Welltower (WELL), logistics property owner Prologis (PLD), and datacenter REIT (EQIX)—collectively account for 20% of the ETF's performance.

Past that, you're getting exposure to retail and residential real estate, hotels, offices, and other property types. You're also getting a good mix of different-sized REITs; large caps only make up 25% of the portfolio, while mid-caps are the largest cohort at 45%, and smalls make up the remaining 30%.

"Vanguard Real Estate Index’s accurate representation of the U.S. real estate segment and its low fee are an attractive combination," Morningstar Associate Analyst Brian Paoli says about the fund's Gold Medalist rating. That, as well as a typically high yield compared to many broad-based real estate funds, makes VNQ one of the best REIT ETFs you can buy right now.

* Vanguard fund assets are spread across multiple share classes, including mutual funds and ETFs alike. Assets listed for each fund in this story are for the ETF share class only.

JPMorgan BetaBuilders MSCI US REIT ETF

Assets under management: $1.2 billion
Dividend yield: 2.7%
Expense ratio: 0.11%, or $1.10 per year on every $1,000 invested
Morningstar Medalist rating: Bronze

The JPMorgan BetaBuilders MSCI US REIT ETF (BBRE) offers a little more access to smaller REITs than Vanguard's VNQ, and at a slightly lower cost.

The Bronze-rated BBRE tracks a custom, adjusted market cap-weighted index that emphasizes mid- and small-cap U.S. real estate equities. The 105-component fund allocates only a quarter of its assets to large-cap REITs; the biggest chunk (40%) belongs to mid-caps, and a sizable 35% is in smalls.

The large-cap exposure still comes in big chunks. Welltower is a 12% weight; Prologis is 9%. Top holdings can occasionally look different from other cap-weighted funds, but right now they're largely similar, holding many of the aformentioned REITs as well as self-storage giant Public Storage (PSA) and apartment specialist Vivmark Residential (VMRK).

So you're not getting a terribly differentiated portfolio, and the extra exposure to smaller stocks tamps down yield a little. But BBRE has it where it counts: Its performance over the trailing three- and five-year periods sits within the top 20% of category funds, easily putting it among the market's best REIT ETFs to buy.

Dimensional Global Real Estate ETF

Assets under management: $3.8 billion
Dividend yield: 3.7%
Expense ratio: 0.22%, or $2.20 per year on every $1,000 invested
Morningstar Medalist rating: Silver

The final REIT ETF on this list, Dimensional Global Real Estate ETF (DFGR), broadens your real estate horizons to the rest of the world.

When it comes to geography, you'll want to know two distinct terms: "international" and "global." "International" means other countries but not the U.S., while "global" means other countries and the U.S. So Dimensional Global Real Estate ETF is specifically telling us that it owns both international and domestic REITs.

Unlike the other funds I've mentioned, Dimensional's offering is actively managed. A four-member team has built a massive portfolio of roughly 420 holdings, split roughly 75/25 between the U.S. and the rest of the world. Practically speaking, that means you're getting a lot of what you've already gotten above: Welltower, Prologis, and the like. But you're also investing in Australia's Goodman Group, U.K. logistics REIT Segro, Hong Kong-based Link REIT, and other overseas names.

Because DFGR doesn't splash much cash around outside of America, there are no massive weights in any one country. But top international exposure right now belongs to Australia (6%), Japan (5%), and the U.K. (3%).

This young fund launched in late 2022, so there's not much of a track record, but it has topped its Morningstar category average and benchmark index over the trailing one- and three-year periods.

DFGR provides some geographic diversification compared to most REIT funds you'll come across, it offers a high yield of nearly 4%, and being actively managed means the fund doesn't have to blindly hold whatever an index commands. And you get all this for a reasonable 22 basis points in fees. That's good enough to merit inclusion among our top REIT ETFs to buy.

Learn More About These and Other Funds With Morningstar Investor

If you're buying a fund you plan on holding for years (if not forever), you want to know you're making the right selection. And Morningstar Investor can help you do that.

Morningstar Investor provides a wealth of information and comparable data points about mutual funds and ETFs—fees, risk, portfolio composition, performance, distributions, and more. Morningstar experts also provide detailed explanations and analysis of many of the funds the site covers.

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