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US vs. Global REITs: Which ETF Wins?
2 Jul
Summary
- iShares ICF offers concentrated US REITs; Vanguard VNQI provides diversified global real estate.
- VNQI is more cost-effective with a 0.12% expense ratio and higher dividend yield.
- US REITs via ICF outperformed international REITs via VNQI in the past year.
Investors considering real estate ETFs are presented with two distinct options: the iShares Select U.S. REIT ETF (ICF) and the Vanguard Global ex-U.S. Real Estate ETF (VNQI). ICF offers a concentrated approach, focusing solely on large-cap U.S. real estate investment trusts with 30 holdings. Its top positions include Welltower, Equinix Reit, and Prologis Reit. Launched in 2001, ICF has a trailing 12-month dividend payout of $1.66 per share, yielding approximately 2.50% at its recent share price.
Conversely, VNQI provides broad diversification across international property markets outside the United States. Launched in 2010, this ETF tracks the S&P Global ex-U.S. Property Index and holds 682 positions. Its largest holdings are Goodman Group, Mitsubishi Estate Co. Ltd., and Mitsui Fudosan Co. Ltd. VNQI offers a higher dividend yield of approximately 4.80% based on a trailing 12-month payout of $2.16 per share. It is also the more cost-effective choice, with an expense ratio of 0.12%, significantly lower than ICF's fee.
While VNQI offers a more economical and globally diversified real estate exposure, ICF's concentrated U.S. REIT strategy has demonstrated superior returns over the past year. Investors must weigh the benefits of lower costs and international diversification against the recent performance of domestic real estate markets.
