🤝 BFF Take
SCHH Wins on Cost — VNQ Wins on Size and Track Record
VNQ (Vanguard Real Estate ETF) and SCHH (Schwab US REIT ETF) both invest in US real estate investment trusts (REITs) — companies that own and operate income-producing real estate. VNQ holds about 160 REITs and charges 0.13%; SCHH holds about 120 REITs and charges 0.07%. The 6 basis point fee difference amounts to $60/year on $100K, which over decades compounds meaningfully. VNQ's size ($35B vs SCHH's $8B) makes it the more liquid ETF, which matters mainly for very large trades. Both are solid choices for adding real estate exposure to a portfolio — SCHH is the cost-efficient pick, VNQ the tried-and-tested standard.
📋 Quick Takeaways
🏢Both own diversified US REITs — apartments, offices, data centers, retail, healthcare, and more
💰SCHH costs 0.07% vs VNQ's 0.13% — SCHH is nearly half the price for similar exposure
🏦VNQ has $35B+ in AUM vs SCHH's $8B — VNQ is significantly more liquid for large orders
📊 Data-Based Take: SCHH has the lower fee
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
✓
Reviewed by a CFA® Charterholder · Data updated Jun 2026 · Educational only, not financial advice
VNQ
Vanguard Real Estate ETF
📋 VNQ vs SCHH — Key Facts Side by Side
| Metric |
VNQ |
SCHH |
| Fund Name |
Vanguard Real Estate ETF |
Schwab US REIT ETF |
| Issuer |
Vanguard |
Schwab |
| Tracks Index |
MSCI US Investable Market Real Estate 25/50 |
Dow Jones US Select REIT |
| Expense Ratio |
0.13% |
0.07% ✓ |
| Cost per $10K/yr |
$13.00 |
$7.00 |
| AUM |
$35B |
$8B |
| Holdings |
160 |
120 |
| Inception |
2004 |
2011 |
| 1-Year Return |
+4.20% |
+3.80% |
| 3-Year Return |
-3.10% |
-3.40% |
| 5-Year Return |
+4.80% |
+4.50% |
| Avg Bid-Ask Spread |
0.00% |
0.01% |
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 VNQ vs SCHH — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy VNQ or SCHH?
Choose if...
VNQ
- You already use Vanguard and prefer staying within their fund family
Choose if...
SCHH
- You want the lowest fees — saves ~$6/yr per $10K vs VNQ
- You already use Schwab and prefer staying within their fund family
📧 Free Weekly Newsletter
Get smarter about ETFs — one concept a week, free forever
The ETF BFF newsletter breaks down one ETF concept per week — clear, jargon-free, and actually useful.
✅ You're in! Check your inbox for your first issue.
❓ VNQ vs SCHH — Frequently Asked Questions
What is the difference between VNQ and SCHH?
VNQ and SCHH both invest in US real estate investment trusts. VNQ tracks the MSCI US REIT index with ~160 holdings and charges 0.13%. SCHH tracks the Dow Jones US Select REIT index with ~120 holdings and charges 0.07%. Both provide exposure to diversified real estate sectors. The index methodology differs slightly — VNQ uses MSCI's real estate universe; SCHH uses Dow Jones's. Performance is similar with SCHH's lower fee giving it a slight edge over time.
Should I add REITs to my portfolio?
REITs can add diversification because real estate returns don't always move in sync with stocks or bonds. They also pay high dividends (REITs must distribute 90%+ of taxable income). However, VTI and VOO already include REITs proportionally — adding a REIT ETF intentionally overweights real estate. This makes sense if you want specific real estate income or believe real estate will outperform. Note: REITs struggled significantly when interest rates rose in 2022-2023.
Why have REIT ETFs performed poorly recently?
Rising interest rates have been the primary headwind for REITs. When rates rise, REIT borrowing costs increase (REITs use significant leverage to finance properties), and their income yields look less attractive relative to risk-free alternatives like T-bills. As rates come down, REIT valuations typically recover. The 2022-2023 rate hike cycle hit real estate hard across the board.
Are REIT ETFs good for income?
Yes — REITs are required to distribute at least 90% of taxable income to shareholders. VNQ and SCHH typically yield 3-4% in dividends, paid quarterly. However, REIT dividends are generally taxed as ordinary income (not qualified dividends), making REITs particularly attractive in tax-advantaged accounts like IRAs. In taxable accounts, their tax treatment is less favorable.
How do VNQ and SCHH compare to owning rental property?
REITs provide real estate exposure without the management burden, illiquidity, and concentration risk of owning a single rental property. You can buy or sell a REIT ETF in seconds; selling a rental property takes months. The tradeoff: rental property can offer leverage benefits and depreciation deductions not available through ETFs. REITs also expose you to commercial real estate sectors (data centers, cell towers, warehouses) that are very difficult to access as a direct investor.
New to ETF investing? See answers to the most common ETF questions →
ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.