Benefits of Investing in Global and Canadian REIT ETFs
Investing in real estate, without the hassles of being a landlord, has never been easier for Canadians. By owning a share of a carefully selected real estate REIT ETF, we can get exposure to apartments, shopping malls, warehouses, offices while enjoying regular distributions and capital appreciation, all without buying physical properties.
In this article, I review the best REIT ETFs in Canada listed on TSX (in CAD), compare their fees, yield, diversification and performance, and help you choose the right one based on your goals: income, growth, or global exposure. REET is an option if you enjoy holding US listed equities.
Related: Investors should consider investing in technology for a growth portfolio. Find the Best Technology ETFs in Canada
Why REIT ETFs Are a Smart Option
- Diversification & ease: A single REIT ETF gives exposure to dozens of real-estate companies across different property types and regions. This is far simpler and more capital-efficient than owning individual REITs or rental properties.
- Income & growth potential: Many REIT ETFs pay monthly or quarterly distributions, often higher than bonds or many dividend stocks, while also offering capital appreciation.
- Liquidity & flexibility: REIT ETFs trade like stocks, so you can buy or sell easily without dealing with property management or large minimum capital.
- Tax-efficient when held in registered accounts: Because real-estate income from REITs/REIT ETFs typically flows through to shareholders, many investors hold them in tax-advantaged accounts (e.g. TFSA, RRSP) to optimize after-tax return.
But like all investments, REIT ETFs have trade-offs. Fees tend to be higher than standard equity index ETFs. Additionally, some ETFs may be concentrated in a few large REITs. Below is a simplified recap of the pros and cons in owning REIT ETFs.
Benefits of REIT ETFs
- Monthly or quarterly distributions: Often higher than dividend stocks
- Instant diversification: Across dozens of properties and sectors
- Liquidity: Buy and sell like any stock
- No landlord headaches: No maintenance, tenants, property taxes
- Low upfront capital requirement
Risks to Consider
- Interest-rate sensitivity: Rising rates can impact real estate valuations
- Sector-specific downturns: Retail and office REITs may underperform
- Distribution tax treatment: Best held in RRSP or TFSA for tax efficiency
Best REIT ETFs in Canada
Below is a curated list of the best REIT ETFs in Canada (TSX-listed), along with updated notes based on performance, yield, fees, and strategy.
| ETF | MER | Yield | Regions | 1y Return | 3y Return | 5y Return | 10y Return |
| CGR | 0.72% | 2.23% | Global | -0.71% | 6.17% | 4.80% | 3.69% |
| PHR | 0.79% | 4.44% | US & Canada | 1.10% | 3.77% | 4.67% | 4.57% |
| RIT | 0.87% | 4.95% | Canada | 4.80% | 5.20% | 5.10% | 7.00% |
| VRE | 0.39% | 2.54% | Canada | -0.91% | 6.26% | 4.55% | 5.50% |
| XRE | 0.61% | 2.79% | Canada | 2.67% | 1.93% | 3.20% | 5.14% |
| ZRE | 0.61% | 5.03% | Canada | 4.71% | 4.30% | 4.70% | 7.19% |
Related: Check out my list for Best & Most Tax Efficient US & International ETFs listed on TSX
Performance, Yield & Risk: What to Check
When you compare REIT ETFs, beyond just yield and returns, consider:What to Look For When Choosing a REIT ETF
When evaluating Canadian or Global REIT ETFs, pay attention to:
MER (Management Expense Ratio):
Lower is generally better as high MERs eat into income.
Sector Exposure
Strong ETFs diversify across:
- Residential
- Retail
- Industrial
- Office
- Healthcare
- Multi-use properties
Weighting Method
- Market-cap weighted: These ETFs are heavy allocation to large REITs
- Equal-weighted: These ETFs are more balanced and reduces concentration risk
Geographic Exposure
Some ETFs focus purely on Canadian REITs, while others include US and global holdings.
Distribution Yield & Sustainability
Look for strong occupancy rates, rising FFO (Funds From Operations), and long-term NAV stability.
Ticker: CGR.TO
Focus: Global REITs including USA, Europe, Asia, Australia
Why It Stands Out: Provides international diversification
Key Features
- Exposure to global real estate markets with a high 65% US exposure
- Moderate MER
- Helps reducing the reliance on Canadian real estate conditions
Best for: Investors seeking global diversification with a high US concentration.
Purpose Real Estate Income Fund (PHR)
Ticker: PHR.TO
Focus: US (40%) and Canadian (60%) REITs
Why It Stands Out: Provides North American diversification while mainting a high 4.5% yield
Key Features
- Exposure to US and Canada real estate markets with a 40% US exposure
- Moderate MER: 0.79%
- Helps reduce reliance on Canadian real estate market
Best for: Investors seeking North American diversification via an actively managed fund.
CI Canadian REIT ETF (RIT)
Ticker: RIT.TO
Focus: Actively managed Canadian REITs (may include some foreign REITs)
Why It Stands Out: Potential for outperformance via active selection
Key Features
- Active management strategy
- Higher MER than passive ETFs
- Historically strong performance periods
Best for: Investors willing to pay higher fees for potential outperformance.
Vanguard FTSE Canadian Capped REIT ETF (VRE)
Ticker: VRE.TO
Focus: Diversified Canadian REIT index
Why It Stands Out: Offers broad coverage of the Canadian property market
Key Features
- Residential, retail, office, and industrial exposure
- Reliable distributions
- Low turnover
Best for: Passive long-term investors seeking stability.
Ticker: XRE.TO
Focus: Large-cap Canadian REITs
Why It Stands Out: Simple, stable, and highly liquid.
Key Features
- Strong exposure to large, established REITs
- Market-cap weighted (heavier exposure to major players)
- Long operating history
Best for: Investors wanting a straightforward and stable REIT ETF.
BMO Equal Weight REITs ETF (ZRE)
Ticker: ZRE.TO
Focus: Equal-weight Canadian REITs
Why It Stands Out: Avoids over-concentration by giving each REIT equal exposure
Key Features
- 20-24 REIT holdings
- Monthly distributions
- Balanced exposure across residential, retail, industrial & office
- Ideal for long-term income investors
Best for: Investors seeking diversification without overweighting large REITs.
The Best Canadian REIT ETF Winner – ZRE
The competition is strong as the financial numbers are close and choosing the best REIT ETF is challenging. From the mentioned best Canadian REIT ETFs, RIT and ZRE are delivering the best annual returns while maintaining the highest distribution yield.
However, as proven, the actively managed RIT is lagging behind the passive ETF, ZRE which delivered higher 10 year return, consistent yield, better trading volume, and lower management fees.
In addition, ZRE includes long-term risk-adjusted performance through its equal-weighted construction and even sector balance. Hence, I recommend ZRE for your REIT portfolio.
The Best Global REIT ETF – CGR
It is difficult to find a global REIT ETFs on TSX. From the listed ETFs with global exposure, I exclude PHR as it includes 60% Canadian REITs already covered through ZRE. I am also not considering ETFs that utilize Covered Call options to generate higher income.
Hence, I CGR is my choice for a global REIT ETF considering its enhanced diversification.
Final Verdict on the Best REIT ETF and Recommendations
Buying ZRE and CGR offers a diversified Canadian and global REIT exposure.
ZRE vs XRE ETFs? Both offer the similar 0.61% MER. However, ZRE has been paying higher distributions and returning a slightly higher performance growth. Among the two, ZRE is a clear winner.
XRE vs VRE ETFs? VRE has a lower MER. However, its yield after deducting the fees is lower. Performance wise, their 10 year return is almost identical. Overall, XRE is a better choice due to its higher yield after subtracting the MER.
ZRE vs XRE vs VRE ETFs? ZRE comes out as the best REIT ETF in Canada as explained previously.
Frequently Asked Questions (FAQs)
Canadian vs Global REIT ETFs: Which Should I Choose?
Choose Canadian REIT ETFs if you want:
- Exposure to Canadian real estate market
- Simpler tax treatment
- Lower currency exposure
Choose Global REIT ETFs if you want:
- Broader diversification
- Access to U.S. and international markets
- Reduced reliance on Canadian property cycles
Tax Efficiency: Where Should I Hold REIT ETFs?
Best accounts:
- TFSA — tax-free income and gains
- RRSP — ideal for income-generating assets like REIT ETFs
Avoid holding in a taxable account as REIT income is taxed as regular income, not eligible dividends.
What Is the Recommended Portfolio Strategy for REITs?
A simple and effective approach for most Canadians:
Core holding: ZRE for domestic diversification
Satellite holding: CGR for global diversification
This combination offers:
- Balanced exposure
- Higher diversification
- Stable distributions
- Reduced concentration risk
Where do I buy the Best REIT ETFs in Canada?
Always buy and sell in commission free brokers. I highly recommend Qtrade, Wealthsimple, Questrade. They are both great, reliable, and no fee brokers. Buy and sell stocks and ETFs freely.
Great analysis my friend ! 👌😀📈💲 I agree with you and that’s why, I choose $ZRE as well for REITs. Even if the MER is expensive, I don’t need to manage individual stocks into that field and I have diversification too. I’m still growing my position and now will receive monthly around 61$ ✓
I hope you are still holding ZRE after all these years. Or did you sell it?
I have ZRE ETF and I am very satisfied with it. It’s well diversify, only bad point the MER of 0,61%. Other than that, great REITs ETF ✓
I hope you are still holding ZRE after all these years. Or did you sell it?