Vanguard Global ex-U.S. Real Estate Index Fund (VNQI)

The internationally focused VNQI ETF has outperformed its U.S.-focused VNQ peer so far in 2025, benefiting from low starting valuations and a weak U.S. dollar.. Both ETFs have shown weak (or even negative) dividend growth over the past decade, impacted by elevated interest rates. Looking ahead, I estimate VNQI should outperform the VNQ by about 2% annually, buoyed by a higher current yield and a currency tailwind from a weaker U.S. dollar.

VNQI offers US investors broad, low-cost exposure to international REITs, enhancing diversification and reducing concentration risk in US real estate. The ETF is attractively valued versus US REITs, with a much lower P/E and P/B ratio, and avoids problematic countries, focusing on developed markets. VNQI's performance has been mediocre long-term but has outperformed peers recently; its low expense ratio is a key advantage over alternatives.

The Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares invests in international real estate stocks, primarily in Japan, Australia, and the United Kingdom. VNQI has outperformed the VNQ so far in 2025, helped by a weak U.S. dollar. I estimate VNQI offers a total return close to 9% before factoring in currency moves.

Many investors are scanning the investment horizon right now, trying to decipher what's coming down the road. President Donald Trump's tariffs are causing panic among many and have spurred economists to revise their recession predictions upward.

When it comes to the markets, U.S. exceptionalism reigned supreme for more than two years, as the broader benchmark S&P 500 outpaced most markets around the world. Recent weakening economic data, concerns about rising inflation, and President Donald Trump's efforts to initiate multiple trade wars have stalled this market run (at least for now).

Real estate has been one of the worst-performing stock market sectors in recent years, mainly thanks to interest rate headwinds. While this hasn't exactly been a great catalyst for real estate investment trust (REIT) returns lately, it has created opportunities for long-term investors to add top-quality real estate exchange-traded funds (ETFs) at relatively cheap valuations.

U.S. REITs have outperformed global peers significantly, driven by valuation multiple expansion, stronger dollar, and higher real GDP growth. U.S. REITs benefited from stronger real GDP growth, supported by population increases and productivity gains, while international REITs faced challenges like weaker growth and demographic issues in certain regions. VNQI trades at significantly lower valuation multiples than VNQ, despite a comparable return on equity, suggesting potential undervaluation of international real estate.

Exclude China and broadly defined EM stocks are posting substantially softer results, based on a set of ETFs through Friday's close. US shares are effectively neck and next with EM so far in 2024.

The Vanguard Global ex-U.S. Real Estate Index Fund ETF invests in global real estate stocks, mainly in the Pacific (49.3% of net assets), Europe (25.7%), and Emerging markets (20.2%). So far in 2024, the VNQI has lagged its US-focused peer, the VNQ, resulting in both ETFs trading at similar dividend yields. I think VNQI offers a higher total return potential as overseas currencies should appreciate driven by interest rate differentials, resulting in larger capital gains.

The Total Stock Market ETF is a great option that should be a part of any portfolio. The Mid-Cap and Small-Cap ETFs are great picks now as the Fed begins to shift policy.

Real estate stocks have taken a hefty beating this year, with REITs having the sole distinction of being the lone S&P 500 group in the red for much of 2024 and only just turning positive last week.

Exchange-traded funds (ETFs) have emerged as a favored instrument for investors seeking straightforwardness, outstanding performance, and cost-effectiveness. Vanguard has transformed into a preferred ETF provider, owing to the company's approach that prioritizes the interests of shareholders.

Vanguard Global ex-U.S. Real Estate ETF is a sell due to poor macro-level prospects for international real estate investment holdings. VNQI has a low expense ratio, substantial dividend yield, and high diversification, but its poor performance outweighs these positive qualities. Investors are likely to see better performance in international funds that are broadly diversified among multiple sectors.

REIT closed-end funds, or CEFs, are offering historically high dividend yields. Some yield as much as 14% right now. Is this an opportunity? We highlight various REIT CEFs and explain which is our favorite today.

Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares offer exposure to real estate equities outside the U.S. The performance of the VNQI ETF has been disappointing and macro risks are high. Investors may be better off creating their own portfolio of individual REITs or investing in larger U.S.-based REITs with overseas properties.

Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares is a well-diversified fund with exposure to over 700 securities in the global ex-US region. The fund's yield and price returns have been erratic and mostly negative, making it a risky investment. VNQI's major investments in REITs and REMDs have failed to generate consistent price growth, and the fund's total returns have been disappointing.