Two of the market's most popular income ETFs compared side-by-side. See which one fits your yield strategy.
What this means: Both SCHH and VNQ fall intoTier 3: Specialty. This suggests they share a similar risk profile and volatility expectation.
| Metric | SCHH | VNQ |
|---|---|---|
| Total Return (1Y) | 1.70% | -0.21% |
| NAV Change (1Y) | -2.45% | -3.74% |
| Max Drawdown | -14.84% | -15.42% |
| Beta | - | - |
* Returns include dividend reinvestment. Drawdown calculates peak-to-trough decline over trailing 12 months.
When two Tier 3 (Sector Specialties, Medium Risk) REIT ETFs differ by just 51bps in yield and track similar real estate indices, investors deserve a precise comparison. SCHH (Schwab US REIT) and VNQ (Vanguard Real Estate) are the two dominant US REIT ETFs, and the choice between them often comes down to cost structure and index methodology rather than dramatically different risk-return profiles. But the details matter for optimizing a real estate allocation.
SCHH tracks the Dow Jones US Select REIT Index — a pure-play REIT benchmark that only includes companies qualifying under the REIT tax structure (must distribute 90%+ of taxable income). VNQ tracks the MSCI US IMI Real Estate 25/50 Index, which adds real estate management and development companies (REOCs) that don't qualify as REITs. In practice, VNQ's ~10-15% non-REIT exposure provides marginal diversification but slightly dilutes the income mandate that makes REITs attractive for dividend investors.
SCHH's zero expense ratio is a genuine competitive advantage. VNQ charges a small but non-zero management fee. Over a 20-year holding period in a real estate allocation, fee compounding matters. SCHH's 3.90% yield combined with zero fees creates a cleaner total return profile for long-term buy-and-hold investors. VNQ's liquidity advantage may justify its fee for active traders who need tight spreads on large positions, but for most retail investors SCHH is the cost-efficient choice.
VNQ is the largest US REIT ETF by AUM, with institutional adoption that ensures consistently tight bid-ask spreads. SCHH is substantial but smaller — spreads are still tight for retail investors, but large institutional block trades are executed more efficiently in VNQ. For individual investors making standard purchases, this distinction is largely irrelevant. For advisors managing large portfolios, VNQ's liquidity profile matters.
Choose SCHH if:
Choose VNQ if:
Every investor has a unique risk profile. Use our Portfolio Intelligence tool to see the impact of adding these ETFs to your holdings.