Recommendations on which Vanguard Real Estate ETF, Index, or Fund? This would be for a retirement account with 30+ years to grow, with dividends reinvested. I’m seeing VNQ and VGSLX come up a lot. What do you guys think?
|Funds||Vanguard Real Estate Index Fund ETF||Vanguard Real Estate Index Fund|
|3-year total return||+10.64%||+10.68%|
|3-year standard deviation||18.92%||18.92%|
|Min. initial investment||–||3,000.00 USD|
|Net expense ratio||0.12%||0.12%|
|Total net assets||44.88bn USD||24.77bn USD|
|Morningstar category||Real Estate||Real Estate|
VNQ is the ETF share class of VGSLX. It’s the same underlying fund with two different ways to buy fractional ownership of the same shared underlying assets (ETF vs. traditional mutual fund).
I personally have 10% of my portfolio in VNQ (Vanguard REIT Index ETF) in my tax-deferred account. It adds some diversification to my portfolio and is good to have in inflationary times.
I just added VGSLX (Vanguard Real Estate Index Fund Admiral Shares ) to the portfolio because it’s better than (losing) $ in the bank.
Still have a long-ish time horizon. I have high-risk tolerance.
Minimal in bonds in overall portfolio asset allocation. Numerous other assets in non-Vanguard holdings.
You may be late to the party investing in REITs. So far this year, REITs have outperformed the S&P 500 by about 7% (down from 10% in June). There may be some gas left in the tank for REITs to continue outperforming the S&P 500, especially with the impact of reopenings post-COVID. Who knows?
It may be worth an investment of up to 5% of your portfolio value if that’s what you want, but I wouldn’t bet the farm on it.
One thing different about VNQ and VGSLX presently is that they have American Tower and Crown Castle in their top 10 holdings.
This is obviously a play on the pending 5G cell phone market rollout. These stocks aren’t typically found in more mainstream REITs. I think later this will serve to be a boost to fund performance.
REITs may not be the same anymore, depending on how much risk you want to take. I own VNQ Real Estate and VNQI international Real Estate, so I am rethinking having this asset class.
I have owned VGSLX for a few years. It’s a great investment for asset allocation, yield, and some long-term growth.
The Vanguard Real Estate Index Fund is in my Rollover IRA, and I have it automatically reinvest the dividends. It has been volatile, partially due to the Covid 19 shutdown.
I want some real estate investments in my portfolio but have no desire to be a landlord or be in real estate investments that can be tough to liquidate. Therefore, this works well for me.
Asset allocation (stocks, REITs, bonds, etc.) is critically important and having assets that perform somewhat out of sync from each other is a good approach for me. I hope this helps!
VNQ’s Fidelity equivalent is FREL. It is an exchange-traded fund that tracks the MSCI USA IMI Real Estate Index. The expense ratio of the fund is 0.084%.
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