VNQI Surpasses VNQ in 2025 Performance, International REITs Offer Higher Current Income

VNQI ETF has outperformed VNQ ETF in 2025 with a gain of ~21% compared to VNQ's gain of ~4%. VNQI tracks the performance of international real estate investment trusts (REITs), while VNQ tracks the performance of U.S.-focused REITs. VNQI's outperformance may be due to its exposure to higher current income from international REITs.

In 2025, the VNQI ETF, which tracks the performance of international real estate investment trusts (REITs), has significantly outperformed the VNQ ETF, which focuses on U.S.-based REITs. The VNQI ETF gained approximately 21% over the year, compared to VNQ's gain of about 4% Classification of REITs as equity to boost investment in Indian real estate: Industry^[1].

This notable outperformance can be attributed to several factors. Firstly, the VNQI ETF's exposure to international REITs has provided it with higher current income. International REITs often offer more attractive yields due to differences in market conditions and regulatory environments. Additionally, the global diversification offered by international REITs can provide a hedge against market volatility in specific regions, such as the U.S.

The performance of the VNQI ETF aligns with broader trends in the global real estate market. The Indian REIT market, for instance, has shown significant growth, with the total assets under management crossing USD 2 billion in 2025 and expected to reach USD 4 billion by 2030. This growth has been supported by regulatory developments, such as the Securities and Exchange Board of India's (SEBI) reclassification of REITs as "equity" for mutual fund investments, which has widened investor participation and strengthened the REIT market Classification of REITs as equity to boost investment in Indian real estate: Industry^[1].

The regulatory changes in India are part of a broader trend of aligning real estate investment vehicles with global best practices. This regulatory clarity and simplification of fund flows have made real estate investments more attractive to both domestic and international investors, potentially contributing to the outperformance of VNQI ETF.

The outperformance of VNQI ETF underscores the importance of diversification in real estate investments. While the U.S. market remains a significant player in the REIT sector, international REITs offer unique opportunities for higher yields and diversification benefits. Investors should consider the benefits of exposure to international REITs when constructing their investment portfolios.