# VNQ vs XLRE: fees, holdings and returns compared

> VNQ vs XLRE: what each ETF holds, what it costs, and how both did over the same dates, with yearly returns and worst drops.

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](https://tactfolio.com/about/editorial-policy). Fund facts checked October 17, 2026. Prices through October 20, 2026.

## 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.

| Fact | VNQ | XLRE |
| --- | --- | --- |
| Full name | Vanguard Real Estate ETF | State Street Real Estate Select Sector SPDR ETF |
| Issuer | Vanguard | SPDR (State Street) |
| Expense ratio | 0.13% a year | 0.08% a year |
| Started trading | September 23, 2004 | October 7, 2015 |
| Tracks | MSCI US Investable Market Real Estate 25/50 Index | Real Estate Select Sector Index |
| Holdings | 139 holdings as of September 30, 2026 | 30 holdings as of October 15, 2026 |
| Type | Real estate, ETF | Real estate, ETF |

Fund facts checked on the [Vanguard VNQ page](https://investor.vanguard.com/investment-products/etfs/profile/vnq) and the [SPDR (State Street) XLRE page](https://www.ssga.com/us/en/intermediary/etfs/state-street-real-estate-select-sector-spdr-etf-xlre).

## 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

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.

| Measure | VNQ | XLRE |
| --- | --- | --- |
| $10,000 grew to | $18,093 | $20,486 |
| Total return | 80.9% | 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 months | 4.0% | 3.3% |
| Last 3 years, per year | 12.8% | 12.8% |
| Last 5 years, per year | 0.7% | 1.3% |
| Last 10 years, per year | 5.1% | 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

| Year | VNQ | XLRE |
| --- | --- | --- |
| 2026 (part of the year) | 7.2% | 7.6% |
| 2025 | 3.3% | 2.6% |
| 2024 | 4.8% | 5.1% |
| 2023 | 11.8% | 12.4% |
| 2022 | −26.3% | −26.3% |
| 2021 | 40.5% | 46.1% |
| 2020 | −4.6% | −2.2% |
| 2019 | 28.9% | 28.7% |
| 2018 | −6.0% | −2.4% |
| 2017 | 4.9% | 10.7% |
| 2016 | 8.6% | 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.

- [Hybrid Asset Allocation (HAA)](https://tactfolio.com/strategies/hybrid-asset-allocation.md), by Wouter Keller and JW Keuning, 2023 (holds VNQ)
- [Bold Asset Allocation (BAA)](https://tactfolio.com/strategies/bold-asset-allocation.md), by Wouter Keller, 2022 (holds VNQ)
- [Defensive Asset Allocation (DAA)](https://tactfolio.com/strategies/defensive-asset-allocation.md), by Wouter Keller and JW Keuning, 2018 (holds VNQ)
- [Protective Asset Allocation (PAA)](https://tactfolio.com/strategies/protective-asset-allocation.md), by Wouter Keller and JW Keuning, 2016 (holds VNQ)
- [Adaptive Asset Allocation (AAA)](https://tactfolio.com/strategies/adaptive-asset-allocation.md), by Adam Butler, Michael Philbrick, Rodrigo Gordillo, and David Varadi, 2012 (holds VNQ)
- [Composite Dual Momentum](https://tactfolio.com/strategies/composite-dual-momentum.md), by Gary Antonacci, 2012 (holds VNQ)
- [Global Tactical Asset Allocation (GTAA 5)](https://tactfolio.com/strategies/global-tactical-asset-allocation.md), by Mebane Faber, 2007 (holds VNQ)
- [Vigilant Asset Allocation G12 (VAA-G12)](https://tactfolio.com/strategies/vigilant-asset-allocation-g12.md), by Wouter Keller and JW Keuning, 2017 (holds VNQ)
- [GTAA 13: Faber’s 13-asset tactical allocation](https://tactfolio.com/strategies/gtaa-13.md), by Mebane Faber, 2013 (holds VNQ)
- [GTAA Aggressive 3 (Faber GTAA AGG3)](https://tactfolio.com/strategies/gtaa-aggressive-3.md), by Mebane Faber, 2013 (holds VNQ)
- [GTAA Aggressive 6 (Faber GTAA AGG6)](https://tactfolio.com/strategies/gtaa-aggressive-6.md), by Mebane Faber, 2013 (holds VNQ)
- [Ivy Portfolio rotation (Faber’s relative strength model)](https://tactfolio.com/strategies/ivy-portfolio-rotation.md), by Mebane Faber and Eric Richardson, 2009 (holds VNQ)
- [Trinity Portfolio (Meb Faber)](https://tactfolio.com/strategies/trinity-portfolio.md), by Mebane Faber, 2016 (holds VNQ)
- [12-Month High Switch (Meb Faber)](https://tactfolio.com/strategies/12-month-high-switch.md), by Mebane Faber, 2020 (holds VNQ)
- [Mama Bear Portfolio (Muscular Portfolios)](https://tactfolio.com/strategies/mama-bear-portfolio.md), by Brian Livingston, 2018 (holds VNQ)
- [Papa Bear Portfolio (Muscular Portfolios)](https://tactfolio.com/strategies/papa-bear-portfolio.md), by Brian Livingston, 2018 (holds VNQ)
- [US Risk Parity Trend-Following (The Trend is Our Friend)](https://tactfolio.com/strategies/us-risk-parity-trend-following.md), by Andrew Clare, James Seaton, Peter N. Smith, and Stephen Thomas, 2016 (holds VNQ)
- [Robust Asset Allocation Balanced (Alpha Architect RAA)](https://tactfolio.com/strategies/robust-asset-allocation-balanced.md), by Wesley Gray (Alpha Architect), 2014 (holds VNQ)
- [Robust Asset Allocation Aggressive (Alpha Architect RAA)](https://tactfolio.com/strategies/robust-asset-allocation-aggressive.md), by Wesley Gray (Alpha Architect), 2014 (holds VNQ)
- [Kipnis Defensive Adaptive Asset Allocation (KDA)](https://tactfolio.com/strategies/kipnis-defensive-asset-allocation.md), by Ilya Kipnis, 2019 (holds VNQ)
- [Ivy Portfolio (Faber and Richardson, buy and hold)](https://tactfolio.com/strategies/ivy-portfolio.md), by Mebane Faber and Eric Richardson, 2009 (holds VNQ)

## 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](https://tactfolio.com/alternatives/VNQ.md) and [XLRE alternatives](https://tactfolio.com/alternatives/XLRE.md).

## Test a mix of VNQ and XLRE

Open the [builder](https://tactfolio.com/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](https://tactfolio.com/etf/VNQ.md) and [XLRE](https://tactfolio.com/etf/XLRE.md), or see [more ETF comparisons](https://tactfolio.com/etf-comparisons.md).

## 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](https://tactfolio.com/docs/backtests.md) for more on these measures.

## Research and test it

- [Portfolio rebalancing](https://tactfolio.com/learn/portfolio-rebalancing): What portfolio rebalancing is, why a 60/40 mix drifts, calendar vs threshold methods, and how taxes and costs fit in.
- [What is an ETF](https://tactfolio.com/learn/what-is-an-etf): An ETF is a fund that trades like a stock. Learn how ETFs work, what they cost, the main types, and the risks, with SEC sources.
- [ETF screener](https://tactfolio.com/screener.md): A free ETF screener for 162 US-listed funds. Filter by type, issuer and fee, sort by returns or worst drop, and compare funds side by side.
- [ETF expense ratio](https://tactfolio.com/learn/etf-expense-ratio): What an ETF expense ratio is, how the fund charges it, and how 0.03% vs 1% adds up over 10 and 30 years, with real fund examples.
- [Backtest a portfolio](https://tactfolio.com/trading-tools/backtest-portfolio): Backtest a portfolio of US stocks and ETFs. Enter tickers and shares, pick when to rebalance, and get the results with a link to share.
- [Backtesting](https://tactfolio.com/backtesting): Free backtesting software for stocks, ETFs, and crypto perps.

## 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

- [Vanguard: Vanguard Real Estate ETF fund page](https://investor.vanguard.com/investment-products/etfs/profile/vnq)
- [SPDR (State Street): State Street Real Estate Select Sector SPDR ETF fund page](https://www.ssga.com/us/en/intermediary/etfs/state-street-real-estate-select-sector-spdr-etf-xlre)

> Not financial advice. Tactfolio is a research and automation tool. It is not a broker or a financial adviser. This page is for education only. Backtests are hypothetical. They show how rules would have done on past prices, not how they will do. All investing involves risk, including losing the money you put in.