Schwab vs. iShares: Which U.S. REIT ETF Looks Best in 2026?

In this ETF matchup, Schwab U.S. REIT ETF (NYSEMKT:SCHH) provides broader diversification and significantly lower costs, while iShares Select U.S. REIT ETF (NYSEMKT:ICF) focuses on a concentrated group of dominant U.S. real estate investment trusts.

Investors seeking real estate exposure often turn to real estate investment trusts (REITs) to avoid the challenges of property management. While both funds provide broad access to this asset class, they differ significantly in their approach to portfolio concentration, cost efficiency, and specific holdings.

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Schwab fund is notably more affordable with an expense ratio of 0.07%, compared to 0.32% for the iShares ETF. Additionally, Schwab offers a higher payout, with a dividend yield of 2.8%.

Growth of $1,000 over 5 years (total return)

Schwab’s fund holds 120 different positions. Its largest include Welltower (NYSE:WELL) at 9.82%, Prologis (NYSE:PLD) at 8.95%, and Equinix (NASDAQ:EQIX) at 4.92%. This ETF was launched in 2011 and has $10 billion in AUM. It has a trailing-12-month dividend payout of $0.65 per share and tracks an index of U.S. equity REITs (excluding mortgage REITs).

In contrast, the iShares ETF is much more concentrated, with just 30 holdings, focusing on the leaders of the industry. Its top holdings include Prologis at 8.1%, Equinix at 7.9%, and Welltower at 7.71%. The iShares fund was launched in 2001 and has $2 billion in AUM. It paid $1.66 in dividends per share over the trailing 12 months.

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Between these two contenders, Schwab's fund looks potentially more attractive to investors. It has a lower expense ratio, higher dividend yield, and better recent performance. It's also much more diversified than the iShares ETF, with about four times as many positions compared to iShares' 30 stocks. That said, there is quite a bit of overlap in their holdings.

One final consideration for investors is these funds' respective assets under management. The Schwab ETF is five times larger than iShares' $2 billion in AUM. Accordingly, SCHH has vastly greater average trading volume, and that increased liquidity could further entice investors.

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Erin Kennedy has positions in Schwab U.S. REIT ETF. The Motley Fool has positions in and recommends Equinix and Prologis. The Motley Fool has a disclosure policy.

Schwab vs. iShares: Which U.S. REIT ETF Looks Best in 2026? was originally published by The Motley Fool