The Best REIT Funds to Invest in for 2025

Real Estate Investment Trusts (REITs) offer a great way to gain exposure to real estate without directly purchasing property. Investing in REIT funds can provide diversification, steady income, and potential capital appreciation. This guide will cover the best REIT funds available in 2025, including Vanguard, Fidelity, and private REIT options.

What Are REIT Funds?

A REIT fund is a mutual fund or exchange-traded fund (ETF) that invests in a portfolio of real estate investment trusts. These funds provide investors with exposure to various real estate sectors, including residential, commercial, and industrial properties.

Why Invest in REIT Funds?

• Diversification: Spread your investment across multiple properties and sectors.
• Passive Income: REITs are required to distribute at least 90% of their taxable income as dividends.
• Liquidity: Unlike direct real estate investments, REIT funds can be bought and sold like stocks.
• Inflation Hedge: Real estate historically performs well during inflationary periods.

Best REIT Funds for 2025

1. Vanguard REIT Index Fund (VNQ)

• Expense Ratio: 0.12%
• Dividend Yield: ~3.8%
• Why It’s Great: VNQ is one of the most popular REIT index funds, offering broad exposure to the U.S. real estate market.

2. Fidelity REIT Index Fund (FSRNX)

• Expense Ratio: 0.07%
• Dividend Yield: ~3.6%
• Why It’s Great: This is a cost-effective option for investors looking to add real estate exposure to their portfolio.

3. Schwab U.S. REIT ETF (SCHH)

• Expense Ratio: 0.07%
• Dividend Yield: ~3.5%
• Why It’s Great: SCHH provides exposure to a diversified portfolio of REITs while keeping costs low.

4. Cohen & Steers REIT Mutual Fund (CSRSX)

• Expense Ratio: 0.98%
• Dividend Yield: ~3.2%
• Why It’s Great: This actively managed fund aims to outperform REIT index funds through strategic asset allocation.

5. Private REIT Funds

• Examples: Blackstone Real Estate Income Trust (BREIT), Starwood Real Estate Income Trust
• Why They’re Great: Private REITs offer higher potential returns but come with liquidity restrictions and higher investment minimums.

How to Choose the Best REIT Fund

Consider the following factors when selecting a REIT fund:

• Expense Ratio: Lower expense ratios mean lower costs for investors.
• Dividend Yield: Look for a strong, sustainable yield.
• Diversification: Some funds focus on specific sectors, while others offer broad market exposure.
• Liquidity: Private REITs have higher potential returns but lower liquidity compared to publicly traded REIT funds.

Conclusion

Investing in REIT funds can be a smart way to add real estate exposure to your portfolio. Whether you prefer a low-cost index fund like Vanguard REIT Index Fund (VNQ) or an actively managed option like Cohen & Steers, there are plenty of choices to fit different investment strategies.

Frequently Asked Questions (FAQs)

1. What is the best REIT index fund?

The best REIT index fund depends on your investment goals. Vanguard REIT Index Fund (VNQ) and Fidelity REIT Index Fund (FSRNX) are top choices for low-cost, diversified exposure.

2. Are REIT mutual funds better than ETFs?

REIT ETFs generally have lower expense ratios and better liquidity, while mutual funds may offer active management benefits.

3. How do REIT funds compare to traditional real estate investing?

REIT funds offer more liquidity and diversification, whereas direct real estate investing provides control and potential tax advantages.

4. What is the best private REIT fund?

Popular private REIT funds include Blackstone Real Estate Income Trust (BREIT) and Starwood Real Estate Income Trust.

By selecting the right REIT fund, investors can enjoy stable income and long-term growth while benefiting from the ease of investing in publicly traded real estate securities.