Vanguard VNQ vs iShares ICF: Which U.S. REIT ETF Should You Buy?
Compare Vanguard VNQ vs iShares ICF: expense ratios, yields, and diversification to decide which U.S. REIT ETF fits your income and risk goals. Update regularly.
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Choosing between Vanguard VNQ and iShares ICF comes down to cost, yield and portfolio breadth. Both ETFs give U.S. investors focused exposure to real estate investment trusts (REITs), but they target the sector differently. Understanding the trade-offs helps align an allocation with your income needs, risk tolerance and tax situation.
Expense ratio and yield are obvious starting points. VNQ is designed as a broad, low-cost real estate ETF and typically carries a much lower expense ratio versus ICF (VNQ ~0.12% vs ICF ~0.34%, approximate as of mid-2024). Lower fees can meaningfully boost long-term returns, especially for buy-and-hold investors. ICF often posts a slightly higher distribution yield, reflecting its more concentrated holdings and sometimes a tilt toward higher-income REIT names, but that yield advantage may be offset by higher fees.
Portfolio breadth and concentration matter next. VNQ tracks a broad U.S. REIT index and holds a large, diversified basket across property sectors — retail, residential, industrial, office and specialized REITs. That breadth reduces idiosyncratic risk and smooths volatility. ICF is more concentrated in large-cap or select real estate firms (it is an iShares ETF that follows a different, narrower index), which can amplify both upside and downside. Concentration can work for investors seeking targeted exposure or higher income, but it increases single-name and sector risk.
Tax efficiency and liquidity are practical considerations. VNQ’s size and liquidity generally make it easy to trade with tight spreads; it’s a common holding in taxable and retirement accounts. ICF can also be liquid but may exhibit wider spreads and higher turnover depending on market conditions. Both ETFs distribute income subject to ordinary income tax rates unless held inside tax-advantaged accounts.
Which should you buy? If you prioritize low cost, broad diversification and a simple core REIT allocation, VNQ is often the better choice. If you want a more concentrated income-oriented sleeve and accept higher fees and volatility for potentially higher current yield, ICF may suit your goals. Always compare the latest expense ratios, yields, holdings and tax treatment before investing. Consider your investment horizon and rebalance accordingly.
Published on: January 3, 2026, 11:05 am
