Vanguard is the world’s largest fund group, overseeing USD 9.1 trillion for around 50 million investors. Thanks to its low fees and investor-friendly initiatives, they have accumulated assets, including second place in robo-advisor business. Furthermore, their managers directly handle trading, giving them insight and an opportunity to address issues quickly proactively; moreover, Vanguard pays them on tracking error or excess returns to foster an incentive culture aligning their interests with that of shareholders in their fund.

As its name implies, this fund follows a real estate index. Specifically, it tracks the MSCI US Investable Market Real Estate 25/50 Index which it fully replicates, comprising stocks of equity REITs (real estate investment trusts). REITs own and manage income-producing properties while earning rent revenue; their cash flows depend on fixed interest rates which makes them less sensitive to rising rates than most equities. Mortgage and hybrid REITs that generate revenue partly through lending are excluded from this fund’s coverage.

This passively managed fund’s portfolio consists of REITs from different property types. This diversification reduces exposure to any one industry or property type; additionally it helps manage interest-rate sensitivity of this REIT-focused fund. The fund occupies the blended third of the Morningstar Style Box; with holdings such as Data Center Operator Digital Realty Trust as well as Healthcare Realty Trust that owns and operates outpatient facilities as holdings.

This fund’s fee structure is significantly lower than average within its category, earning it an A rating on our Process rating scale. Furthermore, its expense ratio of just 0.13% represents 90% less expenses than typical expenses associated with its sector and thus contribute to an impressive track record for performance.

This fund makes quarterly distributions of dividend income, return of capital and capital gains; their taxability cannot be ascertained until year end.