Does VTI Include REITs? A Clear Answer.
LAST UPDATED: July 26, 2023 | By Conrad Golly
REITs (Real Estate Investment Trusts) are a type of security that can be included in some Vanguard funds, offering a way to diversify your portfolio with real estate investments. One such fund that includes REITs is VTI. Does VTI Include REITs?
Currently, REITs account for 2.98% of VTI’s total holdings, making it a good option for those looking to invest in real estate without putting all their eggs in one basket. REITs invest in a variety of real estate properties, such as apartment complexes, commercial retail centers, and medical facilities.
They generate income by investing in properties on which rent is paid, and the income created from leases and rent payments is paid out as dividends to the shareholders of the REIT. Although REITs can be considered a risky investment, they can also help diversify a portfolio and provide positive returns.
Understanding REITs
Other Vanguard funds, such as VNQ and VFAIX, also include REITs. However, investors should be aware of the taxable income in the form of dividends that comes with investing in REITs.
Investing in VTI may be a more sound decision for those worried about paying too much tax with a dividend-only producing fund. Ultimately, the decision to invest in VTI or another Vanguard fund that includes REITs depends on the investor’s goals and risk tolerance.
Real Estate Investment Trusts (REITs) are a type of security that is included in a few Vanguard funds. They offer a good way to diversify your portfolio with real estate, as you may already be aware. This section will provide an overview of REITs, including the types of REITs, equity REITs, and EREITs.
Types of REITs
REITs invest in a large variety of real estate investments. These can include apartment complexes and estates, commercial retail center’s, warehouses, offices, medical facilities and hotels.
REITs typically invest in one sector of the real estate market, even though they hold a range of properties in their portfolio.
There are two main types of REITs: Equity REITs and EREITs. Equity REITs invest in physical properties and generate income from rent. EREITs invest in mortgages and other types of real estate debt.
Equity REITs
Equity REITs are the most common type of REIT. They own and operate income-generating real estate, such as office buildings, shopping centers, and apartment complexes.
Equity REITs generate income by renting out these properties and paying out dividends to shareholders.
EREITs
EREITs invest in mortgages and other types of real estate debt. They generate income from the interest on these investments. EREITs can be a good option for investors who want to invest in real estate but do not want to own physical properties.
REITs as a whole consist of more than $3.5 trillion in gross assets across the United States. REITs listed on the stock-exchange own around $2.5 trillion in assets.
More than 500,000 properties are owned by REITs. There is more than $1 trillion in equity market capitalization for the U.S. listed REITs.
REITs do not increase in value in the same way that stocks and bonds do. Instead, REITs generate income by investing in properties on which rent is paid. The income created from leases and rent payments is paid out as dividends to the shareholders of the REIT.
REITs are often considered an alternative investment. This is because they are bound to legal constraints that stocks are not when it comes to sources of revenue and dividends. This is something that should be taken into account when deciding whether a REIT is good for you.
REITs can sometimes be considered a risky investment since they can lose value when interest rates rise. However, they also can help you to diversify and you can often benefit from good returns.
It should be noted that they perform differently from stocks and bonds, which is what makes them such a good option for diversification. They can also help offset the risk associated with investing in stocks and bonds.
Historically, REITs have provided positive returns while diversifying stocks and bonds, making them a decent investment.
If you are unsure of whether to invest in a fund fully comprised of REITs or in REITs as a singular investment, VTI offers a good option for investing in security.
Most other Vanguard funds, with the exception of a few funds which are specific to other industries, include some percentage of REITs. Vanguard has a REIT ETF, VNQ, which includes holdings in a variety of REITs.
Another fund, the VGSIX (Vanguard Real Estate Index Fund Investor Shares) also is a fund that invests in real estate, however, it is at the time of writing this closed to new investors. VGSIX is also available as an ETF with Vanguard Financials ETF (VFH).
Understanding VTI and REITs
REITs (Real Estate Investment Trust) are a type of security that is included in a few Vanguard funds, offering a good way to diversify your portfolio with real estate investments.
One Vanguard fund that includes REITs is VTI, with 2.98% of VTI’s holdings being REITs, making it a good fund to invest in if you are looking to diversify your portfolio with real estate investments.
REITs consist of more than $3.5 trillion in gross assets across the United States, with more than 500,000 properties owned by REITs.
They invest in a large variety of real estate investments, including apartment complexes, commercial retail centers, warehouses, offices, medical facilities, and hotels.
REITs generate income by investing in properties on which rent is paid. The income created from leases and rent payments is paid out as dividends to the shareholders of the REIT.
Historically, REITs have provided positive returns while diversifying stocks and bonds, making them a decent investment.
VTI is a great way to get into investing in real estate, with REITs accounting for 2.98% of its total holdings.
However, if you wish to invest heavily in real estate, then VNQ may be your best bet when it comes to Vanguard funds. VNQ is a REIT ETF that includes holdings in a variety of REITs.
Other Vanguard funds that include REITs are the VGSIX (Vanguard Real Estate Index Fund Investor Shares), which is closed to new investors at the time of writing, and the Vanguard Index Fund Admiral Shares (VFAIX), which is comprised of mortgage and insurance-based REITs.
Investing in REITs comes with some risk, as well as taxable income in the form of dividends. Since dividends are paid out by funds that are comprised solely of REITs, investing in VTI may be a more sound decision.
With VTI, you can invest in REITs without having to worry too much about the special tax complications that come along with the security.
Investing in VTI
When it comes to investing in real estate via the stock market, REITs are a good option. One Vanguard fund that includes REITs is VTI.
In this section, we will take a closer look at VTI and how it can help you diversify your portfolio with real estate investments.
VTI Profile
VTI is a passive ETF that tracks the performance of the CRSP US Total Market Index. It is an all-cap US equity index ETF that invests in a broad range of stocks across all sectors and industries.
VTI has a low expense ratio of 0.03%, making it a cost-effective way to invest in the stock market.
VTI Performance
VTI has provided strong returns since its inception in 2001. As of July 31, 2021, the fund has returned 8.86%. It has also outperformed its benchmark index over the long term.
VTI Holdings
Currently, REITs account for 2.98% of VTI’s total holdings. While this may not seem like a lot, it is a good amount of REITs for an ETF that is comprised of a variety of holdings.
If you are looking to invest more heavily in real estate, there are other Vanguard funds that include REITs.
Vanguard has a REIT ETF, VNQ, which includes holdings in a variety of REITs. Another fund, the VGSIX (Vanguard Real Estate Index Fund Investor Shares), also invests in real estate but is currently closed to new investors.
Investing in VTI for the sole purpose of investing in real estate may not be the best idea.
However, it is a good way to get your feet wet when it comes to diversifying with real estate investments. If you wish to invest heavily in real estate, then VNQ may be your best bet when it comes to Vanguard funds.
The Bottom Line
VTI is a great way to get into investing in real estate. With VTI, you can profit from positive returns while diversifying your portfolio.
However, if you are worried about paying too much tax with a dividend-only producing fund, investing in VTI may be a more sound decision.
With VTI, you can invest in REITs without having to worry too much about the special tax complications that come along with the security.
VTI and REITs Comparison
VTI is a Vanguard fund that includes REITs, making it a good option for investors looking to diversify their portfolios with real estate investments.
Currently, REITs account for 2.98% of VTI’s total holdings, which is a decent amount for an ETF that is comprised of a variety of holdings.
Investing in VTI can provide positive returns while diversifying your portfolio, but investing in VTI solely for the purpose of investing in real estate may not be the best idea due to the small percentage of the fund that accounts for REITs.
REITs are a type of security that invest in a variety of real estate investments, such as apartment complexes, commercial retail centers, warehouses, offices, medical facilities, and hotels.
They generate income by investing in properties on which rent is paid, and the income created from leases and rent payments is paid out as dividends to shareholders of the REIT.
While REITs can be considered a risky investment due to their sensitivity to interest rates, they can also be a good way to diversify your portfolio and benefit from good returns.
Historically, REITs have provided positive returns while diversifying stocks and bonds, making them a decent investment.
Most other Vanguard funds, with the exception of a few funds specific to other industries, include some percentage of REITs. Vanguard has a REIT ETF, VNQ, which includes holdings in a variety of REITs.
Another fund, the VGSIX (Vanguard Real Estate Index Fund Investor Shares), invests in real estate but is currently closed to new investors. VGSIX is also available as an ETF with Vanguard Financials ETF (VFH).
Investing in REITs comes with some risk, as well as taxable income in the form of dividends. Since dividends are paid out by funds that are comprised solely of REITs, like VNQ, investing in VTI may be a more sound decision.
With VTI, you can invest in REITs without having to worry too much about the special tax complications that come along with the security.
In summary, VTI is a great way to get into investing in real estate, but if you wish to invest heavily in real estate, then VNQ may be your best bet when it comes to Vanguard funds.
You could also look at other Vanguard funds, such as the Vanguard Index Fund Admiral Shares (VFAIX), which is comprised of mortgage and insurance-based REITs.
It ultimately depends on how much you want to invest in real estate via the stock market and how much risk you are willing to take on.
Before you go…
Verdict: Does VTI Include REITs?
Investing in REITs can be a good way to diversify your portfolio with real estate investments. VTI is a Vanguard fund that includes REITs, making it a good option for those looking to invest in real estate without putting all their eggs in one basket.
Currently, REITs account for 2.98% of VTI’s total holdings, which is a good amount for an ETF that is comprised of a variety of holdings. However, if you wish to invest heavily in real estate, then VNQ may be your best bet when it comes to Vanguard funds.
REITs as a whole consist of more than $3.5 trillion in gross assets across the United States. REITs invest in a variety of real estate investments, including commercial retail centers, warehouses, offices, medical facilities, and hotels.
They generate income by investing in properties on which rent is paid, and the income created from leases and rent payments is paid out as dividends to the shareholders of the REIT.
REITs can sometimes be considered a risky investment since they can lose value when interest rates rise. However, they can also help offset the risk associated with investing in stocks and bonds.
Historically, REITs have provided positive returns while diversifying stocks and bonds, making them a decent investment.
Most other Vanguard funds, with the exception of a few funds which are specific to other industries, include some percentage of REITs. Vanguard has a REIT ETF, VNQ, which includes holdings in a variety of REITs.
Another fund, the VGSIX (Vanguard Real Estate Index Fund Investor Shares), also invests in real estate, but it is currently closed to new investors.
Investing in REITs comes with some risk, as well as taxable income in the form of dividends. With VTI, you can invest in REITs without having to worry too much about the special tax complications that come along with the security.
Frequently Asked Questions
What Is The Composition Of VTI?
VTI is a Vanguard Total Stock Market ETF that tracks the CRSP US Total Market Index. It is a passively managed fund that invests in a wide range of US stocks, including large-cap, mid-cap, and small-cap stocks.
Are REITs Included In VTI’s Portfolio?
Yes, REITs are included in VTI’s portfolio. Currently, 2.98% of VTI’s total holdings are in REITs, making it a good option for investors looking to add some real estate investments to their portfolio.
Does VTI Track The Total US Stock Market?
Yes, VTI tracks the CRSP US Total Market Index, which includes nearly 4,000 stocks representing the entire US stock market.
Can I Gain Exposure To REITs Through VTI?
Yes, investors can gain exposure to REITs through VTI, as it includes a small percentage of REITs in its portfolio.
Is VTI A Good Option For Diversification?
Yes, VTI is a good option for diversification as it invests in a wide range of US stocks, including large-cap, mid-cap, and small-cap stocks. Additionally, it includes a small percentage of REITs, which can help diversify an investor’s portfolio further.
What Are The Top Holdings In VTI?
As of June 30, 2023, the top holdings in VTI include Apple Inc., Microsoft Corporation, Amazon.com Inc., Facebook Inc., and Alphabet Inc. Class A.
