Vanguard launched a new international real estate index fund Monday with ETF shares based on the S&P Global ex-U.S. Property Index.
The fund invests in real estate investment trusts (REITs) and real estate operating companies (REOCs) in emerging markets and developed markets outside the United States.
The Vanguard Global ex-U.S. Real Estate Index Fund is offered in four share classes: investor shares, with an estimated expense ratio of 0.50%; institutional shares, 0.30%; signal shares, 0.35%; and ETF shares (VNQI), 0.35%.
On average, international real estate mutual funds have an asset-weighted expense ratio of 1.31%, according to Lipper. Competing international real estate ETFs have an average expense ratio of 0.54%, Morningstar reportrs.
“Modest exposure to real estate investments in a broadly diversified investment portfolio can help moderate overall portfolio volatility and serve as a hedge against inflation,” said Vanguard’s chief investment officer, Gus Sauter, in a press release.
“With international real estate securities representing a growing portion of the overall real estate market, a counterpart to our domestic REIT Index Fund is a natural addition to our index fund lineup,” Sauter explained.