VBR vs VNQ
Vanguard Morningstar Small-Cap Value ETF vs Vanguard Real Estate ETF
Quick Verdict
VBR has a lower expense ratio. VBR delivered stronger 1-year returns. VBR offers more diversification with 847 holdings.
Side-by-Side Comparison
| Metric | VBR | VNQ | Winner |
|---|---|---|---|
| Expense Ratio | 0.05% | 0.13% | |
| AUM | $37.3B | $39.3B | |
| Dividend Yield | 1.76% | 3.49% | |
| Holdings | 847 | 144 | |
| YTD Return | +16.34% | +11.34% | |
| 1Y Return | +21.38% | +10.62% | |
| 3Y Return (annualized) | +16.52% | +10.12% | |
| 5Y Return (annualized) | +9.42% | +1.10% | |
| Volatility (annualized) | 19.0% | 21.4% | |
| Max Drawdown | -64.0% | -75.8% | |
| Fund Family | Vanguard (US) | Vanguard (US) | |
| Category | Equity | Equity | |
| Inception | Jan 26, 2004 | Sep 23, 2004 |
VBR vs VNQ Performance
Vanguard Morningstar Small-Cap Value ETF (VBR) is a ETF from Vanguard (US) and Vanguard Real Estate ETF (VNQ) is a ETF from Vanguard (US). Over the past year VBR returned +21.38% while VNQ returned +10.62%. Year to date, VBR is up 16.34% versus a gain of 11.34% for VNQ.
Over three years, VBR compounded at +16.52% per year against +10.12% for VNQ; over five years the annualized figures are +9.42% and +1.10% respectively. Across the full 22-year window we track, VBR has the edge at +7.94% annualized vs +4.03%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
VNQ has been the more volatile fund, with annualized monthly volatility of 21.4% compared with 19.0% for VBR. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -64.0% for VBR and -75.8% for VNQ. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.78. They usually move together, but the gap leaves some room for diversification.
Fees and Cost Over Time
VBR charges 0.05% per year while VNQ charges 0.13%. On a $10,000 position that is $5 vs $13 annually, a gap of $8 per year that compounds over a long holding period. On income, VBR currently yields 1.76% against 3.49% for VNQ.
Holdings Overlap
VBR and VNQ share 77 holdings out of 903 unique holdings combined, representing a 9.9% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, VBR or VNQ?
VBR has an expense ratio of 0.05% while VNQ charges 0.13%. VBR is the cheaper option. On a $10,000 investment, that is $8 per year of difference.
Which performed better, VBR or VNQ?
Over the past year VBR returned +21.38% vs +10.62% for VNQ, so VBR leads on 1-year performance. Over the longest common window we track (22 years), VBR annualized +7.94% vs +4.03% for VNQ. Past performance does not guarantee future results.
Which is riskier, VBR or VNQ?
VNQ has been the more volatile fund at 21.4% annualized versus 19.0% for VBR. Worst drawdown: VBR -64.0% vs VNQ -75.8%.
Should I hold both VBR and VNQ?
VBR and VNQ have a monthly-return correlation of 0.78, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VBR and VNQ?
VBR and VNQ share 77 common holdings with a 9.9% weight overlap. Combined, they hold 903 unique securities.
Which pays a higher dividend, VBR or VNQ?
VBR yields 1.76% while VNQ yields 3.49%, so VNQ currently pays the higher dividend yield.
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