Guide · Real Estate
Best REIT ETFs
A REIT fund owns shares of publicly traded real-estate investment trusts — companies that own and operate income-producing property and are required to distribute 90% of taxable income to shareholders. The fund is an equity holding, not a direct property holding; what you own is a basket of operating companies whose return profile combines property rental income and price appreciation of the underlying real estate.
How the scoring ranks these funds
The four catalog REIT funds run 7–13 bps in fees and all four hold a similar group of large US REITs (Prologis, American Tower, Welltower, Equinix dominate). The score primarily rewards SCHH and USRT for tighter cost and a slightly leaner holdings list; the larger Vanguard fund (VNQ) is the most-discussed on Bogleheads but is mildly more expensive than the Schwab and iShares cores.
See the methodology for the full formula behind each sub-score.
Top picks
-
86
composite / 100
Schwab's US REIT fund. 7 bps and a clean Dow Jones US Select REIT index — excludes mortgage REITs and timber, so it's a "pure equity REIT" exposure. Highest-scoring catalog fund in the category.
- Expense
- 0.070%
- AUM
- $9.93B
- Issuer
- Schwab
- Detail
- SCHH page →
-
82
composite / 100
Vanguard's flagship real-estate fund and the largest by AUM by a wide margin. 13 bps; tracks MSCI US Investable Market Real Estate 25/50, which includes mortgage REITs and a small specialty-REIT slice. The default fund cited in Boglehead real-estate-sleeve discussions.
- Expense
- 0.13%
- AUM
- $69.95B
- Issuer
- Vanguard
- Detail
- VNQ page →
-
80
composite / 100
iShares' Core US REIT fund. 8 bps and an equity-REIT-only index — closely tracks SCHH in exposure and cost. Works as a tax-loss-harvesting partner to VNQ.
- Expense
- 0.080%
- AUM
- $3.77B
- Issuer
- iShares
- Detail
- USRT page →
-
83
composite / 100
State Street's real-estate sector SPDR. 8 bps; tracks the S&P 500 real-estate sector only, so it holds ~30 large-cap REITs rather than the ~100+ in a broader fund. Concentrated, but the concentration is in the names that dominate the broader funds anyway.
- Expense
- 0.080%
- AUM
- $7.71B
- Issuer
- State Street
- Detail
- XLRE page →
Also in the category
Other funds scoring in this category. Same data, no editorial commentary yet.
Why REITs are tax-inefficient in a taxable account
REIT distributions are mostly non-qualified — taxed at ordinary income rates rather than the lower qualified-dividend rate. The 199A pass-through deduction recovers up to 20% of qualifying REIT dividends, but the remaining 80% still creates a meaningful tax drag at typical income tax brackets. The methodology page sets REITs at a 30 base on tax efficiency for exactly this reason. Holding REITs in an IRA or Roth eliminates the drag entirely.
Do you need a REIT fund if you hold a total-market fund?
A US total-market fund (VTI / ITOT) already holds REITs at their market-cap weight — roughly 2–3% of the fund. A dedicated REIT sleeve overweights real estate by deliberate choice; the case for it rests on whether you believe real estate offers diversification beyond what an equal-weight market position provides. Bogleheads forum opinion is split; the methodology is agnostic.
Guide. Picks come from the live PlainIndex composite for this category; editorial commentary on each pick is hand-written. Re-pulled with every catalog refresh.
PlainIndex publishes data and editorial commentary — nothing here is personalized investment advice. Read the methodology for how the scores referenced here are computed.