Investing in Real Estate? VNQI Goes Global While GQRE Focuses on Quality.

Core Insights - The article compares two ETFs, FlexShares Global Quality Real Estate Index Fund (GQRE) and Vanguard Global ex-U.S. Real Estate ETF (VNQI), highlighting their differences in cost, geographic exposure, and performance [1][2]. Cost and Size Comparison - GQRE has an expense ratio of 0.45% and assets under management (AUM) of $359.7 million, while VNQI has a lower expense ratio of 0.12% and a significantly larger AUM of $3.9 billion [3]. - The one-year return for GQRE is 3.6%, compared to VNQI's 15.9%, and VNQI also offers a slightly higher dividend yield of 4.27% versus GQRE's 4.06% [3]. Performance and Risk Analysis - Over the past five years, GQRE experienced a maximum drawdown of 16.24%, while VNQI had a lower drawdown of 6.71% [4]. - The growth of $1,000 invested over five years would yield $1,043 for GQRE and $851.21 for VNQI, indicating GQRE's better performance despite its higher risk [4]. Portfolio Composition - VNQI invests in over 700 real estate stocks across more than 30 countries, with a portfolio heavily weighted towards global property companies, making up 71% of its holdings [5]. - GQRE holds 170 securities, focusing on quality global REITs, with major positions in American Tower, Digital Realty Trust, and Public Storage [7]. Investor Implications - VNQI's larger size and lower expense ratio may appeal to income-focused investors, especially those concerned about U.S. market volatility due to high interest rates and political uncertainty [9]. - The global real estate market is projected to outperform U.S. real estate for the first time since 2017, with global REITs up 10.4% compared to U.S. REITs at 4.5% [10]. - GQRE's focus on quality REITs has allowed it to outperform VNQI over the past five years, despite its smaller size [11].