Best REIT ETFs in Canada
How to invest in Canadian real estate without buying a house or dealing with tenants.
The Case for Real Estate in Your Portfolio
Real estate has created immense wealth in Canada over the last few decades. However, buying physical investment properties requires massive capital, taking on significant debt, and the ongoing headache of dealing with tenants and maintenance.
Real Estate Investment Trusts (REITs) solve this problem. A REIT is a company that owns, operates, or finances income-generating real estate. By buying a REIT ETF, you instantly own a slice of thousands of apartment buildings, office towers, grocery-anchored retail plazas, and industrial warehouses across the country.
Top Canadian REIT ETFs
There are three major players in the Canadian REIT ETF space, and they structure their indexes slightly differently.
1. VRE - Vanguard FTSE Canadian Capped REIT Index ETF
VRE tracks a slightly broader index than its competitors. Instead of just holding pure-play REITs, VRE also holds real estate service companies and developers (like FirstService Corp or Colliers). This makes it act a bit more like a traditional equity ETF.
- MER: ~0.38%
- Focus: Broad real estate sector exposure.
- Best for: Investors who want exposure to the entire real estate industry, not just property landlords.
2. ZRE - BMO Equal Weight REITs Index ETF
ZRE takes a unique approach: equal weighting. Instead of letting the largest REITs dominate the portfolio, ZRE assigns an equal percentage (around 4-5%) to every REIT it holds. This provides better diversification and protects you if a single massive REIT struggles.
- MER: ~0.61%
- Focus: Equal-weighted pure REITs.
- Best for: Investors looking to minimize concentration risk and capture the growth of mid-sized REITs.
3. XRE - iShares S&P/TSX Capped REIT Index ETF
XRE is the oldest and most established REIT ETF in Canada. It uses a traditional market-cap-weighted approach (though capped so one company doesn't take over entirely). Because of this, it is heavily weighted towards the largest retail and residential REITs in the country.
- MER: ~0.61%
- Focus: Market-cap weighted pure REITs.
- Best for: Investors who want their money concentrated in the absolute largest real estate companies in Canada.
Understanding the Sub-Sectors
When you buy a REIT ETF, you are buying a mix of different types of real estate. The performance of these sub-sectors can vary wildly depending on economic conditions:
- Residential REITs: Own apartment buildings. Generally very stable, as people always need a place to live, and rents tend to rise with inflation.
- Industrial REITs: Own warehouses and distribution centers. Boomed heavily alongside e-commerce and logistics demand.
- Retail REITs: Own shopping malls and grocery-anchored plazas. Vulnerable to e-commerce trends, though grocery-anchored locations remain resilient.
- Office REITs: Own downtown office towers. Currently facing significant headwinds due to the long-term shift towards remote and hybrid work models.
Explore More
See how real estate fits into a balanced, income-generating portfolio:
- Back to the Best Canadian ETFs in 2026 Master Guide
- Explore Best Dividend ETFs in Canada for more yield options
- Compare REITs to Bond ETFs for income generation
Frequently Asked Questions
What is a REIT ETF?
A Real Estate Investment Trust (REIT) ETF is a fund that pools money to invest in a diversified portfolio of physical real estate, including apartment buildings, shopping malls, and industrial warehouses.
Are REIT ETFs a good investment in 2026?
Yes, especially if interest rates have stabilized. REITs offer high distribution yields and act as an inflation hedge since property values and rents generally rise over time.
How are REIT ETF distributions taxed?
Unlike standard dividends, REIT distributions are often a mix of other income, return of capital, and capital gains. They are generally less tax-efficient than eligible Canadian dividends, making them better suited for registered accounts like a TFSA or RRSP.