Real estate is a weird beast right now. For the last couple of years, everyone basically acted like the sky was falling because interest rates went through the roof. But if you look at the Schwab US REIT ETF (SCHH) lately, the vibe is shifting. People are tired of sitting on the sidelines waiting for a "perfect" moment that never actually comes.
Honestly, if you're looking for a way to own a massive slice of American property without actually having to fix a leaky toilet at 2 AM, this is probably the leanest way to do it. As of mid-January 2026, SCHH is sitting with a net asset value (NAV) of roughly $21.48. It’s not flashy, but it’s efficient. While other funds charge you a premium just for the brand name, Schwab is basically the "store brand" that actually tastes better because it costs way less.
Why the Schwab US REIT ETF is Winning the Fee War
Most investors get distracted by dividend yields and forget about the "silent killer" of wealth: expense ratios.
You've probably heard of the Vanguard Real Estate ETF (VNQ). It’s the giant in the room. But here’s the thing—VNQ charges 0.12% (or 0.13% depending on the month). Meanwhile, the Schwab US REIT ETF clocks in at a tiny 0.07%.
Does 0.05% matter? In a single year, maybe not. Over a decade? It’s the difference between a nice dinner out and a down payment on a car. Schwab has built its entire reputation on being the low-cost leader, and SCHH is the poster child for that strategy. It tracks the Dow Jones Equity All REIT Capped Index, which is a fancy way of saying it owns almost every major "pure-play" real estate company in the country.
The "Pure Play" Difference
One thing most people get wrong about real estate ETFs is assuming they all own the same stuff. They don't.
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SCHH is a bit of a purist. It specifically excludes mortgage REITs—the companies that just trade paper and debt—and focuses on the companies that actually own the physical dirt and buildings. We're talking 123 holdings as of January 2026. If a company just flips mortgages, it’s out. If it owns a data center, a mall, or an apartment complex, it’s in.
What’s Actually Inside the Portfolio?
If you opened up SCHH right now, you’d see it’s heavily weighted toward the giants of the industry. It’s not a "bet" on a single sector; it’s a bet on the infrastructure of modern life.
- Welltower Inc (WELL): Currently the top holding at around 9.25%. They own senior housing and outpatient medical buildings. With the "silver tsunami" of aging Baby Boomers, this is basically a demographic inevitability.
- Prologis Inc (PLD): Coming in at 8.95%. If you’ve ever ordered anything from Amazon, it probably sat in a Prologis warehouse. They are the kings of logistics.
- Equinix (EQIX) & Digital Realty (DLR): These two make up nearly 9% combined. They own data centers. In 2026, AI is no longer a buzzword; it’s a massive consumer of electricity and floor space, and these REITs own the floor.
It’s a top-heavy fund, though. The top 10 holdings make up nearly 49% of the total assets. That means if Welltower or Prologis has a bad quarter, the whole ETF feels it.
The 2026 Real Estate Outlook: Why Now?
We are currently seeing what experts call a "valuation divergence." Basically, private real estate prices (what people think their buildings are worth) and public REIT prices (what the stock market says they are worth) have been out of sync for years.
Nareit recently pointed out that this is the longest period of divergence on record. Historically, when these two values finally meet, it's the public REITs—like the ones in the Schwab US REIT ETF—that go on a tear.
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Interest Rates: The Elephant in the Room
Let’s be real: REITs hated 2023 and 2024 because of the Fed. But the narrative for 2026 is all about "normalization."
The market has already priced in the pain. Now, it's looking at the cash flow. SCHH currently offers a trailing 12-month distribution yield of 3.04% and a 30-day SEC yield of 3.53%. It’s not the highest yield on the market—some "high income" REIT ETFs are pushing 10%—but those are often traps using covered calls or risky debt. Schwab gives you the "real" yield from actual rent checks.
SCHH vs. The Competition: A Quick Reality Check
If you're torn between Schwab and the others, here's how it actually breaks down in the real world:
- VNQ (Vanguard): Larger, more liquid, but more expensive. It includes some "specialized" REITs that Schwab skips.
- IYR (iShares): Way more expensive (0.39% expense ratio). It’s used mostly by day traders because of its high volume, not by long-term investors.
- USRT (iShares Core): This is Schwab’s real rival. It’s also very cheap (0.08%). Honestly, the performance between USRT and SCHH is usually a coin toss.
Schwab's 1-year total return has been hovering around +2.27% as of late 2025/early 2026. It’s not "get rich quick" money. It’s "don’t go broke slowly" money.
What Most People Miss: The Tax Cost
REITs are tax-inefficient. Because they don’t pay corporate taxes, they pass almost all their income to you, and Uncle Sam wants his cut at your ordinary income rate.
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Schwab is pretty transparent about this. Their tax cost ratio is about 1.22%. If you’re holding the Schwab US REIT ETF in a standard taxable brokerage account, you’re basically volunteering to give away a chunk of your gains.
Pro Tip: This belongs in a Roth IRA or a 401(k). If you put it there, those dividends compound tax-free. That 3.5% yield starts looking a lot sexier when the IRS can't touch it.
The Verdict: Is SCHH Actually Good?
Look, real estate is cyclical. We’ve moved from the "panic" phase of high interest rates into the "execution" phase. Companies like Realty Income (O) and Simon Property Group (SPG)—both major holdings in SCHH—have spent the last year cleaning up their balance sheets.
If you believe that people will still need to live in apartments, store goods in warehouses, and run servers in data centers, then owning the Schwab US REIT ETF is a no-brainer. It is the cheapest, cleanest way to own the backbone of the US economy.
Actionable Steps for Your Portfolio
If you're ready to add some "dirt" to your portfolio, don't just dump all your cash in at once.
- Check your concentration: If you already own a total market fund like VTI or SCHB, you already own these REITs. SCHH is for people who want to overweight real estate.
- Use a Tax-Advantaged Account: As mentioned, putting this in a Roth IRA is the single best move you can make to protect your yield.
- Watch the 10-Year Treasury: REITs move inversely to the 10-year yield. If you see the 10-year Treasury spiking, wait for the dip. If it's stabilizing, it's usually a green light for SCHH.
- Set it and forget it: This isn't a crypto coin. It’s a slow-moving collection of buildings. Check back in five years, not five minutes.
Real estate isn't going anywhere. While the "work from home" trend hurt offices (which Schwab holds very little of, by the way), the rest of the sector is proving to be incredibly resilient. Schwab’s low-fee approach ensures that when the recovery fully kicks in, more of those gains stay in your pocket rather than the fund manager's.