How to Invest in Real Estate: Choosing Between VNQI's Global Reach and GQRE's Quality Focus

Understanding Your Real Estate Investment Options

When learning how to invest in real estate through ETFs, two popular choices stand out: Vanguard Global ex-U.S. Real Estate ETF (NASDAQ:VNQI) and FlexShares Global Quality Real Estate Index Fund (NYSEMKT:GQRE). While both provide exposure to international real estate markets, their investment philosophies and performance profiles tell very different stories for investors seeking how to invest in real estate globally.

Inside the Funds: Holdings & Geographic Exposure

VNQI casts a wider net with over 700 real estate holdings spanning more than 30 countries outside the U.S. This approach emphasizes maximum geographic spread across international markets. The fund’s largest positions include Goodman Group (OTC:GMGSF), Mitsui Fudosan (OTC:MTSFY), and Mitsubishi Estate (OTC:MITEY), with real estate comprising 71% of its portfolio. Over 15 years of track record and $3.9 billion in assets under management make it the significantly larger vehicle.

GQRE takes a more selective approach, maintaining 170 securities with emphasis on financially strong REITs. Its top three holdings—American Tower (NYSE:AMT), Digital Realty Trust (NYSE:DLR), and Public Storage (NYSE:PSA)—reflect its quality-focused strategy targeting real estate companies with stable earnings and strong financial fundamentals.

The Cost & Income Comparison

For investors considering how to invest in real estate cost-effectively, expense ratios matter significantly. VNQI’s 0.12% fee substantially undercuts GQRE’s 0.45%—a meaningful difference for long-term investors. VNQI also delivers a slightly higher dividend yield at 4.27% versus GQRE’s 4.06%, appealing to income-focused investors.

Performance Reality: Short-Term vs. Long-Term

The one-year comparison strongly favors VNQI, which delivered 15.9% versus GQRE’s 3.6%. However, the longer-term picture becomes more nuanced. Over five years, despite GQRE’s smaller asset base, its quality-focused approach produced different volatility patterns: GQRE showed a maximum drawdown of 16.24% while VNQI experienced 6.71%. A $1,000 investment in GQRE five years ago grew to $1,043, compared to $851.21 in VNQI—meaning GQRE’s quality emphasis actually outperformed despite recent headwinds.

Market Context: Why Global Real Estate Matters

According to Cohen & Steers research, the global real estate market is positioned to outperform U.S. markets for the first time since 2017. International REITs gained 10.4% while U.S. REITs rose 4.5% over the same period, with Asia Pacific and Europe leading gains. This environment favors international exposure when learning how to invest in real estate.

However, context matters: the U.S. still represents roughly 60% of total global real estate market value, and historically the sector has proven resilient domestically. Current high interest rates and political uncertainty affecting housing and commercial real estate in America create a compelling case for geographic diversification.

Risk Profiles & Volatility

VNQI’s lower beta (0.88 versus GQRE’s 1.02) indicates less price volatility relative to the broader market. This stability, combined with its massive AUM, makes it particularly suitable for larger investors seeking easier liquidity. GQRE’s higher beta reflects its concentrated, quality-focused strategy—potentially offering higher upside but requiring greater conviction in REIT selection criteria.

Making Your Investment Decision

Choose VNQI if you: Want broad geographic diversification across 30+ countries, prefer lower fees, seek stability from a larger fund, or prioritize dividend income. Its 700+ holdings and international spread naturally reduce single-company risk.

Choose GQRE if you: Believe quality metrics—financial strength and earnings stability—drive REIT outperformance, accept higher expenses for concentrated conviction, or prefer proven five-year relative performance despite recent underperformance.

The Real Estate ETF Strategy

Rather than viewing these as either-or choices, many investors benefit from understanding how to invest in real estate through multiple approaches. Real estate’s inherent volatility makes bundled exposure through ETFs superior to individual stock picking, as fund structures naturally mitigate downside risk from any single company. Investors fully committed to real estate positioning might hold both VNQI for international diversification and select individual U.S. REITs for domestic exposure, creating a comprehensive approach to how to invest in real estate across geographic and risk dimensions.

The data shows no perfect answer—only trade-offs between cost, diversification breadth, and quality selectivity. Your choice depends on whether you prioritize global spread or concentrated strength when building real estate holdings.