HAUZ vs. REET: Which ETF Offers Better Risk-Adjusted Returns for Global Real Estate Exposure?

Investors seeking exposure to global real estate markets face a critical decision: choosing between the Xtrackers International Real Estate ETF (HAUZ) and the iShares Global REIT ETF (REET). Both funds aim to capture the growth potential of real estate equities but differ significantly in their risk-return profiles and geographic diversification. This analysis evaluates their performance through key metrics such as Sharpe and Sortino ratios, maximum drawdowns, dividend yields, expense ratios, and index composition to determine which ETF offers a more compelling balance of return potential and downside protection.

Risk-Adjusted Returns: Sharpe and Sortino Ratios

As of December 31, 2025, HAUZ demonstrates superior risk-adjusted returns compared to REET. The Sharpe Ratio, which measures excess return per unit of total risk, stands at 1.71 for HAUZ versus 0.60 for REET. Similarly, the Sortino Ratio, which focuses on downside risk, is 2.44 for HAUZ and 0.93 for REET. These metrics indicate that HAUZ generates higher returns relative to its volatility and downside deviations, making it more efficient for risk-averse investors. REET's lower ratios suggest it underperforms in compensating investors for the risks taken, particularly during market downturns.

Downside Protection and Cost Efficiency

Maximum drawdowns further highlight HAUZ's resilience. HAUZ recorded a -39.51% drawdown, outperforming REET's -44.59% according to data. This 5 percentage point difference underscores HAUZ's ability to mitigate losses during adverse market conditions. Additionally, HAUZ's 0.10% expense ratio is lower than REET's 0.14%, offering cost advantages over time. While both funds charge minimal fees, HAUZ's edge in expense efficiency amplifies its appeal for long-term investors.

Dividend Yields and Index Composition

HAUZ also edges out REET in income generation, with a 4.44% dividend yield compared to REET's 3.65% according to analysis. This 0.79 percentage point gap could be significant for income-focused investors. The index composition further differentiates the two: HAUZ tracks the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index, while REET follows the FTSE EPRA/NAREIT Global REIT Index according to index data. HAUZ's exclusion of U.S., Pakistani, and Vietnamese markets allows it to focus on a broader array of international real estate equities, whereas REET's index retains a heavier U.S. bias.

Geographic Diversification: A Key Differentiator

Geographic allocation is where the two ETFs diverge most sharply. HAUZ allocates 98.6% of its portfolio to foreign markets, excluding the U.S., Pakistan, and Vietnam. Its top holdings span Australia, Japan, and Europe, offering exposure to diverse regional real estate cycles. In contrast, REET maintains a 70.46% U.S. allocation, with the remaining 28.97% spread across international markets according to portfolio data. This U.S.-centric approach makes REET more susceptible to domestic interest rate fluctuations and economic cycles, whereas HAUZ's global dispersion reduces concentration risk.

For investors prioritizing geographic diversification, HAUZ's focus on non-U.S. markets-particularly in developed and emerging economies-provides a hedge against regional downturns. REET's heavy U.S. weighting, while offering access to mature REIT markets, limits its ability to capitalize on growth in Asia, Europe, or other emerging regions.

Conclusion: HAUZ Emerges as the More Attractive Option

While both HAUZ and REET offer global real estate exposure, HAUZ's superior risk-adjusted returns, lower drawdowns, and broader geographic diversification make it the more compelling choice for investors. Its higher Sharpe and Sortino ratios, combined with a cost-efficient structure and income-generating potential, position it as a robust vehicle for capturing global real estate growth while managing downside risk. REET, though still a viable option, lags in key metrics and geographic balance, particularly for investors seeking non-U.S. exposure.

In an era of fragmented global markets and rising interest rate uncertainty, HAUZ's diversified approach and risk-conscious design align more closely with the needs of modern investors seeking both resilience and return.