REIT ETFs in 2025: Three Investment-Grade Options for Income Seekers

Understanding the Real Estate Recovery Opportunity

The real estate sector has struggled in recent years, with only a 6% return over the past three years compared to the S&P 500’s impressive 66% gain. Rising interest rates dampened construction activity and weakened residential real estate demand, while the shift to remote work created ongoing pressure on office properties. However, as the Federal Reserve signals potential interest rate cuts, real estate investments are becoming increasingly attractive again.

Real estate investment trusts (REITs) offer a compelling vehicle for gaining exposure to this sector. These funds must distribute 90% of their earnings to shareholders, making them ideal for income-focused investors. ETFs provide an efficient way to access diversified REIT portfolios without picking individual securities.

Three Distinct REIT ETF Strategies

Data Center Innovation Play: DTCR

The Global X Data Center and Digital Infrastructure ETF (NASDAQ: DTCR) captures one of real estate’s most dynamic segments. The data center construction market is projected to grow from $241 billion in 2024 to $456 billion by 2030—an 11.8% compound annual growth rate—driven by artificial intelligence and cloud infrastructure demand.

DTCR’s portfolio of 25 holdings is concentrated in infrastructure leaders: Equinix, Digital Realty Trust, American Tower, Crown Castle, and Applied Digital represent over 45% of assets. With $605.8 million under management, the fund has delivered a 23.4% return year-to-date. The expense ratio stands at 0.5%, or $50 per $10,000 invested annually.

The dividend yield is modest at 1.3%, reflecting the growth-focused nature of these companies as they acquire land and infrastructure for hyperscaler clients. As AI-driven data center expansion accelerates, DTCR positions investors for this structural trend.

Broad Real Estate Exposure: VNQ

The Vanguard Real Estate Index Fund ETF (NYSEMKT: VNQ) takes a different approach, tracking the MSCI US Investable Market Real Estate 25/50 index across market capitalizations. This $64 billion fund provides exposure to 153 securities with no single name exceeding 7% weighting.

Year-to-date returns reached 3.8%, and the top five holdings—Welltower, Prologis, American Tower, Equinix, and Digital Realty—comprise only 26% of the portfolio. This diversification reduces concentration risk significantly. The real advantage emerges in costs and yield: an ultra-low 0.13% expense ratio and a generous 3.8% dividend yield make VNQ attractive for income investors preparing to benefit from rate cuts and falling bond yields.

International and Diversified: RWO

The SPDR Dow Jones Global Real Estate ETF (NYSEMKT: RWO) offers the broadest diversification with 220 holdings spanning domestic and international markets. Nearly 30% of assets come from non-U.S. companies, providing currency diversification benefits as a weaker dollar enhances returns from foreign profits.

The fund’s year-to-date return of 8.7% reflects balanced exposure across Welltower, Prologis, Equinix, Simon Property Group, and Realty Income, which collectively represent 28% of assets. The 3.6% dividend yield is compelling, though the 0.5% expense ratio is higher than VNQ. RWO successfully balances yield, international exposure, and diversification while outperforming the broader real estate sector.

Choosing Your Strategy

DTCR suits investors betting on artificial intelligence and data center tailwinds with higher growth potential and lower current yields. VNQ appeals to those prioritizing income stability and cost efficiency across traditional real estate segments. RWO works best for investors seeking geographic diversification and international exposure alongside strong dividend income.

Each addresses different investment objectives within the REIT space, with interest rate cuts likely to enhance all three options’ appeal to income-seeking investors throughout 2025.