VNQ vs XLRE: fees, holdings and returns

VNQ holds about 140 US real estate companies of every size. XLRE holds only the real estate companies in the S&P 500, about 30. The largest REITs lead both. XLRE charges a lower fee. Over the same dates since October 2015, VNQ returned about 5.5% a year and XLRE returned about 6.7% a year.

Written by the Tactfolio research team. Fund facts checked October 17, 2026. Prices through October 20, 2026.

VNQ

Yearly fee
0.13%
about $13 on $10,000
Return per year
5.5%
since October 2015
Worst drop
−42.4%
since 2015
Started trading
Sep 2004
Vanguard

XLRE

Yearly fee
0.08%
about $8 on $10,000
Return per year
6.7%
since October 2015
Worst drop
−38.8%
since 2015
Started trading
Oct 2015
SPDR (State Street)

Key points

  • XLRE costs less: 0.08% a year against 0.13%.
  • VNQ started trading in September 2004. XLRE started in October 2015.
  • Worst drops since 2015: VNQ −42.4%, XLRE −38.8%.
  • Daily correlation: 0.98 (1 means they always move together).

What is the difference between VNQ and XLRE?#

XLRE holds just the biggest real estate companies, so its top holdings make up a larger part of it. VNQ adds dozens of mid-size and small REITs. Smaller REITs can swing more, so VNQ has sometimes fallen or risen more. Both fall when interest rates rise sharply, as in 2022.

FactVNQXLRE
Full nameVanguard Real Estate ETFState Street Real Estate Select Sector SPDR ETF
IssuerVanguardSPDR (State Street)
Expense ratio0.13% a year0.08% a year
Started tradingSeptember 23, 2004October 7, 2015
TracksMSCI US Investable Market Real Estate 25/50 IndexReal Estate Select Sector Index
Holdings139 holdings as of September 30, 202630 holdings as of October 15, 2026
TypeReal estate, ETFReal estate, ETF

Fund facts checked on the Vanguard VNQ page and the SPDR (State Street) XLRE page.

Is VNQ or XLRE cheaper?#

XLRE costs less: 0.08% a year against 0.13%. On $10,000, that is about $13 a year for VNQ and $8 for XLRE. The fund takes its fee out of its own value a little each day, so you never get a bill.

VNQ vs XLRE performance over the same dates#

$10k$20k201620182020202220242026
VNQXLREGrowth of $10,000, log scale, with dividends reinvested. Past results do not tell you what happens next.

Both funds are measured from October 2015 to October 2026, the dates both traded. VNQ returned about 5.5% a year and XLRE returned about 6.7% a year. XLRE came out ahead over this period, which does not mean it will again.

MeasureVNQXLRE
$10,000 grew to$18,093$20,486
Total return80.9%104.9%
Return per year (CAGR)5.5%6.7%
Worst drop from a high−42.4%−38.8%
Volatility (how much it swings)20.3%20.2%
Last 12 months4.0%3.3%
Last 3 years, per year12.8%12.8%
Last 5 years, per year0.7%1.3%
Last 10 years, per year5.1%6.6%

Prices through October 20, 2026. Figures use daily closing prices adjusted for splits, with dividends reinvested. They do not include taxes or the cost of buying and selling. Past results do not tell you what will happen next.

VNQ and XLRE returns by year#

YearVNQXLRE
2026 (part of the year)7.2%7.6%
20253.3%2.6%
20244.8%5.1%
202311.8%12.4%
2022−26.3%−26.3%
202140.5%46.1%
2020−4.6%−2.2%
201928.9%28.7%
2018−6.0%−2.4%
20174.9%10.7%
20168.6%2.8%
2015 (part of the year)2.2%4.4%

Which fell further in bad times?#

A drawdown is how far a fund falls from its last high point. VNQ’s worst fall was −42.4%, from February 21, 2020 to March 23, 2020. It got back to that high on April 15, 2021.

XLRE’s worst fall was −38.8%, from February 21, 2020 to March 23, 2020. It got back to that high on April 5, 2021.

Their daily moves had a correlation of 0.98. A correlation of 1 means two funds always move up and down together. Near 0 means they move on their own. So holding both adds little variety.

Why people choose VNQ or XLRE#

VNQ. People who want US real estate companies of every size tend to pick VNQ.

XLRE. People who want only the largest US real estate companies, at a low fee, tend to pick XLRE.

Strategies that hold VNQ or XLRE#

These classic strategies hold one or both at least some of the time. Each is a set of written rules you can open, test and copy.

Other funds like VNQ and XLRE#

Each fund has more funds that hold the same kind of investments, ranked by how closely they move with it: VNQ alternatives and XLRE alternatives.

Test a mix of VNQ and XLRE#

Open the builder, add VNQ and XLRE, and give each a weight, such as 50% and 50%. The backtest shows how the mix would have done, with its worst drop, on daily prices. You can also add a rule, for example to switch between them, and compare. Read the full pages for VNQ and XLRE, or see more ETF comparisons.

The details#

Both funds use Tactfolio’s stored daily prices, adjusted for splits, with dividends reinvested. They are compared only on days both traded, starting the later fund’s first day, so neither gets a head start. Correlation uses daily returns over the same days. Read what a backtest simulates for more on these measures.

Research and test it

Common questions#

Is XLRE more concentrated than VNQ?#

Yes. XLRE holds about 30 companies and VNQ about 140, so XLRE’s largest holdings make up more of it.

Why do real estate funds fall when rates rise?#

Higher rates raise what REITs pay to borrow and make their payouts look less attractive next to bonds, so their prices tend to fall.

Which is cheaper, VNQ or XLRE?#

XLRE costs less: 0.08% a year against 0.13%. Fees come from each issuer and were checked on October 16, 2026.

Which did better, VNQ or XLRE?#

From October 2015 to October 2026, VNQ returned about 5.5% a year and XLRE returned about 6.7% a year, with dividends reinvested. Their worst drops were −42.4% and −38.8%. Past returns do not tell you what comes next.

Sources#