The goal: U.S. real estate exposure, Canadian simplicity
Many Canadian investors want to add real estate exposure to their portfolio without buying property directly.
In the U.S., one of the most popular choices is VNQ — the Vanguard Real Estate ETF.
It offers simple, diversified exposure to U.S. Real Estate Investment Trusts (REITs) — companies that own and operate income-producing properties like office buildings, warehouses, apartment complexes, and shopping centers.
With a yield near 3.7% and holdings in over 150 major U.S. REITs, VNQ has become a go-to ETF for long-term income and diversification.
But for Canadians, buying VNQ directly comes with complications:
- It’s listed in USD, meaning conversion fees.
- It’s subject to U.S. withholding tax on dividends (except in RRSPs).
- It’s foreign property for tax reporting if you hold over $100,000 CAD in U.S. assets.
That’s why investors often search for a “VNQ Canadian equivalent” — something listed on the TSX, traded in Canadian dollars, and providing similar exposure.
🔍 Understanding what “equivalent” really means
When Canadians say “VNQ equivalent,” they’re usually looking for:
| Goal | What It Means |
|---|---|
| Exposure | U.S. REITs (not Canadian REITs) |
| Currency | Canadian dollars preferred |
| Listing | ETF traded on the TSX |
| Tax | Canadian tax-reporting simplicity |
| Yield | Regular income distributions |
Unfortunately, there’s no Canadian-listed ETF that perfectly replicates VNQ’s portfolio of U.S. REITs.
Instead, investors have a few practical options depending on their priorities.
🏢 Option 1 – Buy VNQ directly (U.S.-listed)
Ticker: VNQ (NYSE)
MER: 0.12%
Currency: USD
Yield: ~3.7%
Exposure: 100% U.S. REITs
Best account: RRSP (to avoid 15% withholding tax on dividends)
✅ Pros
- Direct exposure to the full U.S. REIT market
- Lowest fees and highest liquidity
- Easy to understand and globally diversified within U.S. property types
⚠️ Cons
- Must convert CAD to USD
- Withholding tax applies in TFSA or non-registered accounts
- FX fluctuations affect returns
💡 Tip: Holding VNQ inside an RRSP is often the most efficient approach — no U.S. tax drag and full exposure to American real estate.
🏦 Option 2 – Canadian REIT ETFs (not true equivalents but still real estate exposure)
If you prefer to stay fully in Canadian dollars, you can buy ETFs that hold Canadian REITs.
These funds don’t track U.S. real estate, but they offer monthly income and exposure to Canada’s property market — often with higher yields.
| ETF | Name | Focus | MER | Yield (approx.) | Key Holdings |
|---|---|---|---|---|---|
| ZRE.TO | BMO Equal Weight REIT Index ETF | 🇨🇦 Canadian REITs | 0.55% | ~5.2% | RioCan, SmartCentres, Granite |
| VRE.TO | Vanguard FTSE Canadian Capped REIT ETF | 🇨🇦 Canadian REITs | 0.38% | ~4.8% | Allied, RioCan, Granite |
| XRE.TO | iShares S&P/TSX Capped REIT ETF | 🇨🇦 Canadian REITs | 0.61% | ~4.9% | CAR.UN, SmartCentres, RioCan |
✅ Pros
- Traded in CAD, no currency risk
- Higher yields than VNQ
- Suitable for TFSA, RRSP, or non-registered accounts
⚠️ Cons
- Canadian REIT market is small (~20 stocks total)
- Less diversified than VNQ
- More concentrated in retail and residential properties
These ETFs are excellent for income stability, but remember: they track Canadian real estate, not the U.S. market.
💵 Option 3 – U.S. REIT mutual funds offered in Canada
If your goal is U.S. real estate exposure without trading in USD, some Canadian mutual funds invest directly in U.S. REITs.
Examples include:
| Fund | Provider | MER | Description |
|---|---|---|---|
| RBC U.S. REIT Fund (Series F) | RBC Global Asset Management | ~1.4% | Diversified portfolio of top U.S. REITs |
| Fidelity U.S. REIT Fund (Series F) | Fidelity Investments Canada | ~1.5% | Similar exposure to VNQ in CAD |
| TD U.S. Real Estate Fund | TD Asset Management | ~1.9% | Active management of U.S. REITs |
✅ Pros
- Held in CAD (no FX conversion)
- Provides true U.S. REIT exposure
- Available through most Canadian brokerages
⚠️ Cons
- Much higher fees (MERs over 1%)
- May underperform passive ETFs like VNQ
These are often used in managed portfolios or by investors who want simplicity and don’t mind paying for it.
🌍 Option 4 – Global or U.S. total-market ETFs that include some REIT exposure
If you already hold a diversified U.S. total-market ETF such as VUN.TO or XUU.TO, you already own a small slice of U.S. REITs (about 2–3% of the index).
However, this exposure is minimal and won’t replicate VNQ’s performance.
These ETFs are great for general diversification but not for targeted real-estate exposure.
⚖️ Choosing what’s best for you
| Investor Type | Best Choice | Why |
|---|---|---|
| Want true U.S. REIT exposure | Buy VNQ (USD) | Exact same holdings as U.S. investors, low cost |
| Prefer to stay in CAD | ZRE.TO or VRE.TO | Canadian REIT exposure, high yield, no currency risk |
| Want U.S. REITs in CAD without converting currency | RBC or Fidelity U.S. REIT Funds | Mutual funds provide the correct exposure |
| Already hold total-market ETFs | No change needed | You already have minor REIT exposure |
🧩 The bottom line
As of 2025, there is no ETF listed on the TSX that perfectly replicates VNQ’s exposure to U.S. REITs in Canadian dollars.
However, you still have excellent options:
- Buy VNQ directly if you’re comfortable using USD (best inside RRSP).
- Choose Canadian REIT ETFs like ZRE.TO or VRE.TO for local property exposure and higher yields.
- Consider U.S. REIT mutual funds if you want VNQ-like exposure but prefer to stay in CAD.
Each approach has trade-offs in currency risk, taxes, and cost — but all can help you achieve the same goal: adding the stability and income of real estate to your investment portfolio.