After a volatile few years for real estate investors, REITs may finally be regaining momentum. As of May 12, the FTSE Nareit All Equity REIT Index was up 11.5% year to date, significantly outperforming the S&P 500’s 8.1% price return over the same period. That rebound comes after real estate stocks spent much of the past few years under pressure as rising interest rates weighed on property values and investor sentiment.
But interest rates only tell part of the story, according to Edward Pierzak, senior vice president of research at the National Association of Real Estate Investment Trusts, or Nareit. “REITs have historically delivered solid total returns across a range of rate environments,” he says.
While rates certainly matter, broader economic conditions and property-level fundamentals like occupancy and rent growth often play just as important a role, Pierzak adds. Many REITs have entered 2026 with relatively low leverage and well-structured debt, helping position the sector for a potentially stronger environment ahead.
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There are also signs that some recent headwinds may begin to reverse. “The AI-driven rally in tech stocks has widened the valuation gap between REITs and the broader equity market, while the sharp rise in interest rates in 2022 created an unusually long disconnect between public and private real estate values,” Pierzak says. “Historically, these kinds of divergences tend to correct, and when they do, REITs have often outperformed as we’re seeing so far in 2026.”
For long-term investors, REIT ETFs can offer a relatively simple way to gain diversified exposure to the real estate that supports everyday life, including apartments, shopping centers, warehouses, self-storage facilities, data centers and telecommunications infrastructure. That diversification can be especially valuable because different property sectors tend to respond to economic conditions differently.
Some areas of the market may also be better positioned than others right now. According to Nareit’s latest active manager tracker, large actively managed REIT funds are overweight sectors like health care, telecommunications, infrastructure and data centers. This suggests some professional investors see stronger long-term opportunities in these areas, Pierzak says.
Of course, REIT ETFs still come with risks. Real estate remains sensitive to financing costs and economic slowdowns. REIT dividends are also generally taxed as ordinary income, making these funds potentially better suited for tax-advantaged accounts. Expense ratios can vary meaningfully from fund to fund, too, which may affect long-term returns.
Still, for investors looking for income, diversification and exposure to a sector that may be positioned for a broader recovery, the following REIT ETFs could play a thoughtful role in a balanced 2026 portfolio:
| REIT | 30-DAY SEC YIELD | EXPENSE RATIO |
| Vanguard Real Estate ETF (ticker: VNQ) | 3.6%* | 0.13% |
| State Street Real Estate Select Sector SPDR Fund (XLRE) | 3.3% | 0.08% |
| Schwab U.S. REIT ETF (SCHH) | 3.3% | 0.07% |
| iShares Global REIT ETF (REET) | 3.2% | 0.14% |
| Nuveen Short-Term REIT ETF (NURE) | 4.6%* | 0.36% |
| iShares Residential and Multisector Real Estate ETF (REZ) | 2.6% | 0.48% |
| Invesco KBW Premium Yield Equity REIT ETF (KBWY) | 7.6% | 0.35% |
*Denotes trailing-12-month yield rather than 30-day SEC yield.
Vanguard Real Estate ETF (VNQ)
This market capitalization-weighted fund is one of the largest REITs in its category, with nearly $70 billion under management. Instead of concentrating only on the biggest REITs, VNQ reaches across the full market with large, midsize 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.
VNQ’s passive approach keeps turnover low at about 7%, which helps keep costs down and performance steady. This is reflected in the 0.13% expense ratio. So, if you’re looking to anchor your real estate exposure in 2026, it’s hard to find a more balanced, durable option.
[Read: 10 of the Best REITs to Buy for 2026]
State Street Real Estate Select Sector SPDR Fund (XLRE)
XLRE is another low-cost REIT ETF that belongs on your radar. 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 mid-May, only 25 names make up the portfolio.
Leaning into companies with stronger balance sheets also has the added benefit of a potentially stronger yield. If you want a blue-chip style REIT ETF at a rock-bottom cost, give XLRE a look.
Schwab U.S. REIT ETF (SCHH)
SCHH is one of the cheapest REIT ETFs on the market, charging just 0.07%, making it even cheaper than the aforementioned XLRE.
The fund offers broad exposure to U.S. REITs by tracking the Dow Jones Equity All REIT Capped Index. This index generally includes all publicly traded REITs with market caps of $200 million or more, excluding mortgage and hybrid REITs. This means you’ll get exposure to a wide mix of property types, including health care, retail, industrial, data centers and telecommunication REITs.
Like many market cap-weighted funds, it still leans heavily toward larger industry players with 50% of its assets in the top 10 names and about 10% in health care and senior housing REIT Welltower Inc. (WELL) alone. But that concentration also means you get exposure to some of real estate’s strongest balance sheets and most established operators.
If you want diversified real estate exposure without paying up for active management or niche strategies, SCHH offers a simple, low-cost way to build long-term REIT exposure.
iShares Global REIT ETF (REET)
Most REIT ETFs focus almost entirely on the U.S. market, but not REET. As the name suggests, it provides exposure to real estate companies around the world, including developed and emerging markets across Europe, Asia, Australia and the U.S. That global reach can help diversify a portfolio beyond the U.S. economy and provide access to international real estate trends that domestic-only funds may miss. However, the fund does sit at nearly three-quarters U.S.-based REITs currently, so watch out for overlap if you pair this with a U.S. REIT ETF.
Of course, international investing comes with added complexity. Currency fluctuations, geopolitical risks and differing economic conditions can all affect returns. But if you’re looking to broaden your real estate exposure beyond the U.S. while still collecting income from REIT distributions, REET offers a convenient all-in-one global option.
Nuveen Short-Term REIT ETF (NURE)
If you’re worried that interest rates could stay higher for longer, NURE may appeal. It focuses on REIT sectors with shorter lease durations. Landlords with shorter leases can often adjust rents more quickly when inflation or interest rates rise, potentially helping revenue keep pace with changing market conditions.
It tracks the Dow Jones U.S. Select Short-Term REIT Index, which focuses on REITs that own apartments, hotels, self-storage facilities and manufactured housing, where leases tend to be shorter. The fund is also fairly concentrated, holding only 31 REITs.
NURE does charge a slightly higher expense ratio of 0.36%, and is on the smaller side at about $33 million in assets. The trading volume also tends to be low with only about 4,400 shares trading each day. This can increase the bid-ask spread and reduce liquidity. Still, its tactical focus and trailing-12-month yield above 4.6% may appeal if you’re comfortable with those risks.
iShares Residential and Multisector Real Estate ETF (REZ)
Health care is the most heavily weighted REIT sector among professional asset managers, according to Nareit’s latest review. If you want to invest like the pros, REZ is a good way to go.
The ETF provides targeted exposure to health care REITs alongside residential and self-storage real estate. Nearly half of the portfolio is in health care, with about 23% in Welltower alone, but the other sectors give a bit of diversification. That mix could position the fund to benefit from aging demographics and growing demand for senior housing.
Of course, specialization comes with trade-offs. REZ is more concentrated than broad-market REIT ETFs. Still, if you’re seeking a more demographic-driven real estate angle, REZ offers a compelling way to tap into the health care REIT theme without taking on single-stock risk.
Invesco KBW Premium Yield Equity REIT ETF (KBWY)
If you’re looking for income from your real estate portfolio, you may want to pay particularly close attention to KBWY.
This ETF focuses primarily on small- and mid-cap equity REITs with higher dividend yields, helping it generate one of the highest yields in the REIT ETF space. As of early May 2026, the fund boasted a 30-day SEC yield of 7.6%, with a distribution rate above 8.6%.
That eye-popping yield involves an acceptance of more risk. Because the fund tilts toward smaller, higher-yielding REITs, it can be more volatile than broader real estate ETFs.
That said, if you prioritize current income and are comfortable taking on additional volatility, KBWY stands out as one of the more aggressive yield plays in the REIT ETF market. The fund also pays distributions monthly for more frequent cash flow.
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7 Best REIT ETFs to Buy for 2026 originally appeared on usnews.com
Update 05/13/26: This story was published at an earlier date and has been updated with new information.
