⚖️ XLRE vs VNQ Comparison · Free & No Signup

XLRE vs VNQ: S&P 500 REIT Slice vs the Full REIT Market

XLRE holds only the real estate companies inside the S&P 500. VNQ holds the entire U.S. REIT market. The fee gap is just 4 basis points, but the holdings gap is large: 31 stocks versus 160+.

💰 XLRE is cheaper 🔬 Compare top 10 holdings → 💡 Plain-English verdict

🤝 BFF Take

VNQ for Broader REIT Diversification. XLRE If You Only Want S&P 500 Names.

XLRE (Real Estate Select Sector SPDR Fund) and VNQ (Vanguard Real Estate ETF) are both REIT ETFs, but they draw from different universes. XLRE holds only the real estate companies inside the S&P 500 — currently about 31 REITs including Prologis, American Tower, Equinix, and Welltower. VNQ tracks the MSCI US Investable Market Real Estate 25/50 Index, which holds 160+ REITs and real estate companies including many smaller names not in the S&P 500. XLRE charges 0.09% versus VNQ's 0.13%. The 4 basis point fee advantage for XLRE is real but modest. The more meaningful difference is scope: XLRE gives you concentrated large-cap REIT exposure; VNQ gives you the full market. For most investors who want broad real estate exposure, VNQ's wider net is worth the 4 basis point premium. XLRE makes more sense if you specifically want to express a view on large-cap REITs or if you are building a portfolio that already includes S&P 500 exposure and want a targeted sector add.

📋 Quick Takeaways

🏢XLRE holds 31 REITs from the S&P 500. VNQ holds 160+ REITs from the full U.S. market, including mid- and small-cap real estate companies.

💰XLRE costs 0.09%, VNQ costs 0.13%. The 4 basis point gap is $40/year on $100,000 — meaningful but not decisive.

⚠️Both funds are highly interest-rate sensitive. They tend to rise when rates fall and fall when rates rise, more so than most equity sectors.

📊 Data-Based Take: VNQ 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

XLRE

Real Estate Select Sector SPDR Fund

Expense Ratio

0.09% ✓

1-Year Return

+7.8%

AUM

$5B

Holdings

VNQ

Vanguard Real Estate ETF

Expense Ratio

0.13%

1-Year Return

+7.4%

AUM

$36B

Holdings

165

📋 XLRE vs VNQ — Key Facts Side by Side

Metric	XLRE	VNQ
Fund Name	Real Estate Select Sector SPDR Fund	Vanguard Real Estate ETF
Issuer	SPDR	Vanguard
Tracks Index	Real Estate Select Sector Index (S&P 500)	MSCI US IMI Real Estate 25/50
Expense Ratio	0.09% ✓	0.13%
Cost per $10K/yr	$9.00	$13.00
AUM	$5B	$36B
Holdings	31	165
Inception	2015	2004
1-Year Return	+7.80%	+7.40%
3-Year Return	+1.40%	+1.10%
5-Year Return	+5.20%	+4.90%
Avg Bid-Ask Spread	0.01%	0.01%

Data from ETF BFF database. Returns are annualised. Not investment advice.

📊 XLRE vs VNQ — Annualised Returns

Annualised returns (trailing, price-based). Past performance does not guarantee future results.

🎯 Should You Buy XLRE or VNQ?

Choose if...

XLRE

You want the lowest fees — saves ~$4/yr per $10K vs VNQ
You want focused large-cap US stock exposure via Real Estate Select Sector Index (S&P 500)

Choose if...

VNQ

You want broader diversification (165 holdings vs 31)
You already use Vanguard and prefer staying within their fund family

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❓ XLRE vs VNQ — Frequently Asked Questions

What is the difference between XLRE and VNQ?

XLRE holds only the real estate companies included in the S&P 500 — currently around 31 REITs. VNQ tracks a broader index covering the full U.S. investable real estate market, holding 160+ companies including many mid- and small-cap REITs not in the S&P 500. XLRE is more concentrated in larger, more established REITs. VNQ includes specialty REITs, smaller operators, and a wider range of real estate sub-sectors.

Is XLRE or VNQ better for dividend income?

Both pay REIT dividends, which are taxed as ordinary income in taxable accounts (not at qualified dividend rates) — an important tax consideration. VNQ's broader exposure can result in a slightly different yield profile depending on which REIT sectors are strong in a given period. Both pay quarterly. For either fund in a taxable account, the ordinary income tax treatment makes a Roth IRA or 401k the preferred location. Past performance does not guarantee future results.

How interest rate sensitive are XLRE and VNQ?

Both are among the most interest-rate sensitive equity funds available. REITs carry significant debt loads and are valued partly like bonds — when interest rates rise, the value of future cash flows is discounted more heavily and REIT prices fall. The reverse is also true: when rates fall, REIT prices tend to rally. In 2022, when the Fed raised rates by 425 basis points, both XLRE and VNQ fell roughly 25-30%. This is a structural characteristic of the asset class, not a specific fund risk.

Does XLRE overlap with VOO or SPY?

Yes. XLRE holds exactly the real estate companies inside the S&P 500 — the same companies that appear in VOO and SPY at their market-cap weights. Holding both XLRE and VOO/SPY results in overweighting the S&P 500's real estate sector relative to its natural index weight. VNQ also overlaps with the S&P 500's real estate holdings, but adds non-S&P 500 REITs on top. If you hold VOO and want to add real estate exposure beyond the S&P 500's natural weight, VNQ adds more incremental diversification than XLRE.

What REIT types are in VNQ but not XLRE?

VNQ includes mid- and small-cap REITs across all sub-sectors: self-storage operators, manufactured housing REITs, smaller retail and industrial REITs, timber REITs, farmland REITs, and regional data center operators that are not large enough for S&P 500 inclusion. XLRE is limited to the largest, most established REITs that meet S&P 500 requirements. For investors who want exposure to the full spectrum of commercial real estate through REITs, VNQ is the more complete vehicle.

New to ETF investing? See answers to the most common ETF questions →

📄 XLRE & VNQ Fact Sheets

XLRE Fact Sheet→ VNQ Fact Sheet→

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.