VNQ vs VO
Vanguard Real Estate ETF vs Vanguard Morningstar Mid-Cap ETF
Quick Verdict
VO has a lower expense ratio. VO delivered stronger 1-year returns. VO offers more diversification with 289 holdings.
Side-by-Side Comparison
| Metric | VNQ | VO | Winner |
|---|---|---|---|
| Expense Ratio | 0.13% | 0.03% | |
| AUM | $39.3B | $106.6B | |
| Dividend Yield | 3.49% | 1.32% | |
| Holdings | 144 | 289 | |
| YTD Return | +13.57% | +13.60% | |
| 1Y Return | +12.92% | +16.94% | |
| 3Y Return (annualized) | +11.70% | +17.25% | |
| 5Y Return (annualized) | +2.31% | +8.13% | |
| Volatility (annualized) | 21.4% | 16.9% | |
| Max Drawdown | -75.8% | -60.3% | |
| Fund Family | Vanguard (US) | Vanguard (US) | |
| Category | Equity | Equity | |
| Inception | Sep 23, 2004 | Jan 26, 2004 |
VNQ vs VO Performance
Vanguard Real Estate ETF (VNQ) is a ETF from Vanguard (US) and Vanguard Morningstar Mid-Cap ETF (VO) is a ETF from Vanguard (US). Over the past year VNQ returned +12.92% while VO returned +16.94%. Year to date, VNQ is up 13.57% versus a gain of 13.60% for VO.
Over three years, VNQ compounded at +11.70% per year against +17.25% for VO; over five years the annualized figures are +2.31% and +8.13% respectively. Across the full 22-year window we track, VO has the edge at +9.19% annualized vs +4.14%. 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 16.9% for VO. 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 -75.8% for VNQ and -60.3% for VO. 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
VNQ charges 0.13% per year while VO charges 0.03%. On a $10,000 position that is $13 vs $3 annually, a gap of $10 per year that compounds over a long holding period. On income, VNQ currently yields 3.49% against 1.32% for VO.
Holdings Overlap
VNQ and VO share 14 holdings out of 409 unique holdings combined, representing a 5.1% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, VNQ or VO?
VNQ has an expense ratio of 0.13% while VO charges 0.03%. VO is the cheaper option. On a $10,000 investment, that is $10 per year of difference.
Which performed better, VNQ or VO?
Over the past year VNQ returned +12.92% vs +16.94% for VO, so VO leads on 1-year performance. Over the longest common window we track (22 years), VNQ annualized +4.14% vs +9.19% for VO. Past performance does not guarantee future results.
Which is riskier, VNQ or VO?
VNQ has been the more volatile fund at 21.4% annualized versus 16.9% for VO. Worst drawdown: VNQ -75.8% vs VO -60.3%.
Should I hold both VNQ and VO?
VNQ and VO 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 VNQ and VO?
VNQ and VO share 14 common holdings with a 5.1% weight overlap. Combined, they hold 409 unique securities.
Which pays a higher dividend, VNQ or VO?
VNQ yields 3.49% while VO yields 1.32%, so VNQ currently pays the higher dividend yield.
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