After a choppy 2025, real estate investors are cautiously optimistic for 2026. In its December 2025 outlook, the National Association of Real Estate Investment Trusts, or Nareit, highlighted that REITs “continued to deliver solid operational performance and maintained well?structured balance sheets with low leverage.” This positions the companies for continued growth in 2026, according to Nareit.
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REITs still come with caveats. Dividends are typically taxed as ordinary income. If the fund has a high expense ratio, the combination of taxes and expenses can eat into your long-term returns. REITs are also sensitive to rising interest rates, and diversification benefits shrink during broad market downturns. But they can also provide inflation protection, regular income and are particularly well?suited for tax?advantaged accounts.
For investors who want income, diversification and exposure to a sector that may be poised for a rebound, the following REIT ETFs can play a thoughtful role in a balanced 2026 portfolio:
| REIT | 30-DAY SEC YIELD | EXPENSE RATIO |
| Vanguard Real Estate ETF (ticker: VNQ) | 3.8%* | 0.13% |
| Fidelity MSCI Real Estate Index ETF (FREL) | 3.2% | 0.084% |
| State Street Real Estate Select Sector SPDR Fund (XLRE) | 3.4% | 0.08% |
| iShares U.S. Real Estate ETF (IYR) | 2.9% | 0.38% |
| iShares Select U.S. REIT ETF (ICF) | 2.8% | 0.32% |
| Vanguard Global ex?U.S. Real Estate ETF (VNQI) | 4.5%* | 0.12% |
| iShares Mortgage Real Estate Capped ETF (REM) | 9.7% | 0.48% |
*Trailing-12-month yield.
Vanguard Real Estate ETF (VNQ)
This market capitalization-weighted fund is one of the largest REITs in its category, with about $65.7 billion under management. Morningstar’s Brian Paoli calls it “an accurate representation of the U.S. real estate segment,” and that breadth is exactly what sets VNQ apart.
Instead of concentrating only on the biggest, flashiest REITs, VNQ reaches across the full market with large, mid and small real estate companies. That wider net helps reduce concentration risk, although the fund still carries over half its weight in the top 10 names of its portfolio.
The fund passively tracks the MSCI Investable Market Real Estate 25/50 Index, which helps it keep turnover low, averaging under 8% over the past five years through 2025, according to Paoli. This in turn helps keep costs down and performance steady.
With a handsome yield and only 0.13% expense ratio, VNQ offers income, diversification and a disciplined process — all at a low fee. For investors looking to anchor their real estate exposure in 2026, it’s hard to find a more balanced, durable option.
Fidelity MSCI Real Estate Index ETF (FREL)
The Fidelity MSCI Real Estate Index ETF is one of the most quietly effective ways to get broad U.S. real estate exposure in 2026, especially if you’re fee?sensitive. With an expense ratio of just 0.084%, FREL undercuts most of its peers while still delivering a full?market sweep of U.S. REITs and real estate companies. It tracks the MSCI US IMI Real Estate 25/25 Index, which means you’re not just getting the big landlords and data?center giants. You’re also getting mid? and small?cap names that round out the sector and help diversify risk.
FREL holds roughly over 130 stocks, giving it a broad footprint to help minimize concentration risk. And with a 3.2% 30-day SEC yield, FREL offers meaningful income without forcing you into the higher?risk corners of the REIT universe.
To top it off, FREL is ranked the No. 1 real estate fund currently by U.S. News & World Report. Low cost, high yield and broad diversification for the win.
State Street Real Estate Select Sector SPDR Fund (XLRE)
XLRE is another low-cost REIT ETF that belongs on your radar. Ranked the No. 2 real estate fund by U.S. News, this fund undercuts FREL on expenses by 0.004%. That’s not a big number, but over time, every penny saved helps generate better long-term returns.
XLRE applies a narrower lens to the REIT market by focusing on the real estate companies in the S&P 500. This means you’re only getting exposure to some of the largest and most well-established real estate companies in the U.S. That concentration may appeal to investors who like the stability of industry leaders. As of early February, only 31 names make up the portfolio.
Leaning into companies with stronger balance sheets also has the added benefit of a potentially stronger yield. XLRE tops this list with a 3.4% 30-day SEC yield.
iShares U.S. Real Estate ETF (IYR)
IYR is one of the veterans of the real estate ETF world. The fund debuted in June 2000, which means it survived the 2008 financial crisis. Like the funds listed before it here, IYR is a passive index fund. It tracks the Dow Jones U.S. Real Estate Capped Index. The “cap” element is a weight cap that prevents any single company from representing more than 10% of the portfolio. Also, the biggest names in the fund cannot account for more than 22.5% of the entire portfolio. In other words, there’s bumper rails to shield investors from overconcentration risk.
That said, the portfolio is on the smaller side, with 61 names. This means the top-10 holdings still account for over half of the portfolio’s weight. But you are getting stocks of all sizes and both growth and value plays. An SEC yield pushing 3% is a nice take-home pay for investors after the slightly higher expense ratio of 0.38%.
iShares Select U.S. REIT ETF (ICF)
Another REIT ETF from the iShares fund family worth considering is ICF. It measures performance of the Cohen & Steers Realty Majors Index. This is a relatively concentrated fund, with just 30 holdings.
Developer Cohen & Steers says its underlying market cap-weighted index is “composed of REITs that we believe are dominant in their respective property sectors.” It keeps things liquid by screening out REITs with average trading volumes below 600,000, and protects stability with a minimum market cap of $500 million. There is also a concentration shield in play that prevents any holding from being more than 8% of the portfolio.
Like its cousin, IYR, ICF debuted in the early 2000s. It also offers a 30-day SEC yield just south of 3% for an expense ratio just north of 0.3%. This may be a fair price to pay for a liquid, time-tested and diversified fund.
Vanguard Global ex?U.S. Real Estate ETF (VNQI)
Real estate isn’t only lucrative in the U.S. As with your broader portfolio, it can be a smart move to globally diversify your real estate holdings. This is where VNQI comes into play.
This global real estate ETF excludes U.S. companies in favor of over five foreign regions.
The dominant region includes the emerging-market nations. These countries haven’t achieved their “developed” badge — like Singapore, China and India. They also haven’t experienced the same level of urbanization and rising incomes as developed nations. This gives them theoretically more room to grow, but also the potential for a lot more volatility as they progress through their growing pains.
This gives VNQI a very different risk-return profile from U.S.-only REIT ETFs. When emerging markets are strong, VNQI can capture that growth. But when they’re volatile, the fund can feel bumpier than its domestic counterparts. That said, using a market-cap weighting helps VNQI lean into its largest and most liquid holdings, providing a bit of stability.
The fund paid out nearly 4.5% over the past 12 months, but doesn’t publish a 30-day SEC yield, likely because of the different earning structure in foreign investments. So, it’s hard to compare future earnings potential relative to its peers.
iShares Mortgage Real Estate Capped ETF (REM)
If you want high yield from your real estate portfolio, REM may be the REIT ETF for you. With a 30-day SEC yield over 9.7%, you’ll be taking home a fair bit of bacon with this one. It does have the highest expense ratio on this list at 0.48%, but the yield is the deciding factor for most investors.
Unlike broad REIT funds that own landlords and data?center operators, REM focuses on mortgage REITs, the corner of the market that earns money by financing real estate rather than owning it. That business model is more sensitive to interest?rate swings, but it also tends to throw off significantly higher yields. REM’s payout often lands well above what you’ll find in equity REIT ETFs, making it a popular satellite holding for income?focused portfolios.
REM tracks the FTSE Nareit All Mortgage Capped Index. This gives you exposure to both residential and commercial mortgage REITs. These companies borrow at short?term rates and invest in longer?term mortgages, so their profitability rises and falls with the shape of the yield curve. When rate volatility settles — as many expect heading into 2026 — mortgage REITs can recover quickly. REM gives you a fairly diversified way to capture that rebound without betting on a single name.
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7 Best REIT ETFs to Buy for 2026 originally appeared on usnews.com
Update 02/10/26: This story was published at an earlier date and has been updated with new information.
