Vanguard Global ex-U.S. Real Estate is a solid foreign real estate offering that boasts a very low fee, though excluding U.S. securities makes it a strange fit in the global real estate Morningstar Category.

The S&P Global ex-U.S. Property Index, which this fund fully replicates, has a narrower scope than its global real estate peers. It features real estate investment trusts and real estate stocks from everywhere except the United States. By excluding domestic real estate, the fund restricts its opportunity set and differentiates itself from its peers, diminishing the impact of its cost advantage.

Asian real estate securities dominate the portfolio. They represented roughly 63% of it as of October 2023—the second-highest rate in the 63-fund category. Japanese securities led all countries with a 24% portfolio weight, and Hong Kong (9%), Singapore (7%), and China (6%) received significant investment as well. Consequently, the fund's category-relative performance can fluctuate with the broad Asia-Pacific market. Many of these securities joined the index because of its relatively lax market-cap and real estate revenue requirements. That feature also sweeps in more emerging-markets securities than average: Their 17% portfolio weight towered over the category average of 2% at the end of October 2023. 

The index weights stocks by market capitalization, which is a sensible approach. It channels the market's collective view on the relative value of each holding. Market-cap-weighting also curbs turnover and the associated transaction costs.

Market-cap-weighting can induce concentration, but this fund's broad reach makes it a well-diversified offering. Its 700-plus holdings, the most in the global real estate category as of October 2023, invite little firm-specific risk. The fund spreads its investments across an array of property types and countries, too.

Unlike many of its peers, real estate stocks—not REITs—shape most of this portfolio. This is mostly because of geography. Real estate securities tend to come in the form of development companies in markets like China and Hong Kong, while REITs are more popular in markets like the United Kingdom and Australia. The two different structures should provide similar exposure.

Analyst Rating

A solid choice for foreign real-estate exposure.

Analyst

Ryan Jackson

SCANA

Clarus

Leggett & Platt

Gladstone Land

Affiliated Mgr Grp 6.375 % Notes 2012-15.8.42 Sr

Gramercy Property Trust

Li Auto Inc.

Reaves Utility Income Fund

Mack-Cali Realty

Blend Labs

This index tracked by this fund casts a wide net. It also taps into the market's collective wisdom with market-cap-weighting. These features make it a solid foreign real estate option, but excluding U.S. securities makes it a misfit in the global real estate category. It warrants an Average Process Pillar rating.

Average

Process

This well-supported team earns an Above Average People rating. The portfolio managers use Vanguard's global infrastructure and portfolio management technology as members of Vanguard's equity index group. 

Michael Perre and Scott Geiger comanage this strategy. Perre is a principal in the Vanguard equity index group. He has been with Vanguard since 1990 and has worked in various roles at Vanguard, including accounting, securities lending, and trading. Geiger took over responsibility for this fund from Justin Hales in July 2022. He manages a range of equity portfolios and has been with Vanguard since 2006. 

Manager changes like this one from July 2022 aren't unusual at Vanguard. Managers typically rotate to different funds every few years to improve their breadth and depth of expertise. These managers not only oversee each portfolio but also execute trades on a day-to-day basis. They also have access to Vanguard's global trading desks, enabling them to make the most cost-efficient transactions in various global markets. 

Vanguard's compensation structure aligns managers' interests with investors'. The managers are compensated with a bonus that factors into the fund's ability to meet its objectives. This includes the managers' record of tracking their benchmark index over the prior 12 months.

Above Average

People

The Vanguard Group retains a High Parent rating. 

Mutual ownership, low costs, and a direct-to-investor playbook have helped spur Vanguard's leadership within the United States. Client service missteps notwithstanding, Vanguard over the past decade has grown its market share of U.S. open-end and exchange-traded fund assets at about a 5% annualized clip. At that rate, Vanguard's portion of the U.S. industry will cross 50% around 2035.

True, some competitors can now match or even undercut Vanguard on fees for broad market exposure. But Vanguard's burgeoning advice business could help it keep or even extend that lead. Through Digital Advisor and Personal Advisor Services, Vanguard has built an increasingly compelling ecosystem of advice for investors with simple to complex needs.

Vanguard is also using its advice business to expand overseas, but that's a work in progress. Of Vanguard's USD 7.6 trillion in global assets under management in March 2023, non-U.S. investors owned less than 10%, a figure that has changed little in recent years. Strategic shifts in China and other markets account for the slow pace, including returning money to institutions that had been layering on fees. Vanguard hopes to recoup that money and more by focusing on individual investors and the advisors who serve them. Provided Vanguard sticks to its playbook, its advantages should translate into success abroad, too.

High

Parent

Vanguard Global ex-U.S. Real Estate ETF

VNQI tracks a market-cap-weighted index of non-US real estate investment trusts.

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Vanguard Total US Bond Market (BND) bucked the trend and posted a fractional 0.05% weekly gain. There are signs in early trading today (Mon., Nov 29) that global markets are stabilizing after Friday's rout.

Only U.S. Bonds Were Spared From Last Week's Widespread Losses

VNQI tracks a global property index with a tilt towards the Japanese and Australian equities (the Pacific region). As the Pacific region has an outsized impact on its total returns, investors shunning too-large exposure to the yen or the commodity-sensitive Australian dollar should think twice before going long.

VNQI: Exposure To Global Real Estate But Patchy Dividend

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Inflation has jumped recently. Aggressive fiscal and monetary policy may mean more inflation lies ahead. I tested various categories of ETFs by correlating their returns with concurrent changes in monthly Treasury-TIPS breakeven inflation rates.

Hedging Inflation Risk With ETFs

The red-hot industrial property market - the physical "hub" of e-commerce - has shown few signs of cooling down through mid-2021 as businesses scramble to build out supply chain resiliency. Industrial REITs - which recorded the strongest earnings and dividend growth of any real estate sector in 2020 - continue to thrive amid this insatiable demand for logistics space.

Industrial REITs: Who Doesn't Love Logistics

With higher and more persistent inflation looming in the US, it is important for investors to look for investment that can hedge the inflation risk and also provide geographical diversification. Historical data have shown international REITs to be effective at fighting inflation and also to provide a relatively uncorrelated income stream.

VNQI: Inflation Hedge And Income Diversification With International REIT

US bonds posted the only gain for the major asset classes for the trading week ended Friday, June 18, based on a set of ETFs. For the one-year trend, all but one of the major asset classes are posting gains, although the range of results varies widely.

Widespread Losses Weighed On Global Markets Last Week

The allure of REITs is rising as inflation worries heat up. Foreign property shares were the second-best performer last week.

U.S. REITs Led Major Asset Classes For Second Straight Week

We break REITs into 3 "Super Sectors" to assess the damage from the pandemic, and also the recovery and reopening progress. The Super Sectors show how mixed things have been within the REIT asset class (and why nuanced allocations will payoff).

REITs - Out Of The Ruins

Foreign and US property shares rallied last week, posting the strongest gains for the major asset classes. US stocks lost ground for a second straight week via Vanguard Total US Stock Market.

Real Estate Rebounds In Mixed Week For Major Asset Classes

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The rise in commodities led mostly positive returns for the major asset classes for the trading week through Apr. 23, based on a set of exchange traded funds.

Commodities Led Returns For Global Markets Last Week

REET is a one-stop shop for investors who want broad exposure to global real estate (including the US) through a single investment vehicle. However, if investors are willing to own two ETFs rather than one for real estate exposure, I argue that two Vanguard ETFs get the job done better than REET.

REET Vs. VNQI: The Better Way To Play International Real Estate

Amid flat-to-negative performances for most of the major asset classes, last week's strong rally in real estate stocks ex-US stands out. This corner of global markets led by a wide margin, based on a set of ETFs through the close of the trading week on Friday, Mar. 19.

Foreign Property Shares Led Markets By Wide Margin Last Week

Uniti Group

Most REITs have strongly recovered over the past month. Investors need to become more creative to find bargains.

2 REITs With More Than 100% Upside Potential

Vanguard Global ex-U.S. Real Estate ETF invests in global real estate stocks. Presently, real estate markets around the world are passing through a rough patch.

Vanguard Global Ex-U.S. Real Estate ETF: Falling Yield

Vanguard US Real Estate popped 1.9% last week, the fund's strongest weekly gain since mid-November. The Global Markets Index retreated last week for the first time this year.

U.S. Property Shares Led Returns For Major Asset Classes Last Week

Emerging markets shares topped last week's gains for the major asset classes, based on a set of exchange-traded funds as of Friday's close. Equities in developed markets ex-US were a close second-place weekly performer.

Foreign Stocks Led Mixed Run For Global Markets Last Week

American Tower

Digital Realty Trust

OUTFRONT Media

Prologis

Sun Communities

I used to only invest in private real estate. Looking back, this was a mistake, and today I favor REITs in most cases.

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A broadly defined, equal-weighted measure of commodities led a mixed run for the major asset classes. The WisdomTree Enhanced Commodity Strategy Fund rose 0.8%, posting its second straight weekly gain.

Commodities Rallied And Emerging Markets Tanked Last Week

The Vanguard Total Stock Market ETF revived its long-running winning streak following the coronavirus crash in March and rose 1.7% last week. A broad measure of US investment-grade fixed income, the Vanguard Total Bond Market ETF, slipped 0.1%.

U.S. Stocks Led Global Rally In Asset Classes Last Week

Broadly defined commodities posted the strongest gain for the major asset classes in last week's trading, followed closely by wide-ranging rallies in fixed-income markets around the world, based on set of ETFs.

Commodities Rallied As U.S. REITs Tumbled Last Week

Vanguard US Real Estate rose 6.9% by the close of trading on Friday, Nov. 13, ending near its highest level since the coronavirus crash in March.

Property Shares Led Broad Rally In Global Markets Last Week

Vanguard's ex-US Real Estate ETF yields more than double the dividend yield of US REITs, while being better diversified and better positioned against a declining dollar. Globally, as in the US, real estate companies have been hard-hit this year, and so this sector offers excellent value for investors not expecting massive defaults.

VNQI: At Over 5% Yield, Foreign Real Estate Pays You To Hedge Against Inflation And Devaluation

Vanguard FTSE Developed Markets surged 7.6% - the fund's strongest weekly increase since April. The rally lifted the ETF to its highest close so far in the post-coronavirus-crash rebound.

Clean Sweep: All The Major Asset Classes Posted Gains Last Week

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News for Vanguard Global ex-U.S. Real Estate ETF ETF (VNQI)