Fidelity’s two REIT index funds, FSRNX and FREL, hold the same portfolio and track the same benchmark, so the choice between the Fidelity REIT index funds FSRNX vs. FREL comes down to how you want to trade rather than what you’ll own. FSRNX is the mutual fund, priced once a day, with a 0.07% expense ratio. FREL is the ETF version, tradeable throughout the day, at 0.084%. Long-term buy-and-hold investors usually land on FSRNX for the lower cost and automatic dividend reinvestment. Investors who want intraday pricing or limit orders lean toward FREL.1Fidelity Investments. Fidelity Real Estate Index Fund – FSRNX
What Both Funds Own
FSRNX and FREL both track the MSCI US IMI Real Estate 25/25 Index, which covers the full range of publicly traded U.S. real estate companies.1Fidelity Investments. Fidelity Real Estate Index Fund – FSRNX The 25/25 rule caps any single company at 25% of the index and prevents companies weighted above 5% from collectively exceeding 50%. Because both funds hold the index, their top positions match: Prologis, Welltower, American Tower, Equinix, Simon Property Group, Realty Income, Digital Realty Trust, Public Storage, CBRE Group, and Crown Castle. The composition tilts more toward logistics warehouses, cell towers, and data centers than toward the office towers and shopping centers many investors picture when they hear “REIT.”
Both funds recently yielded around 3%. That yield is a feature of the underlying structure: a REIT must distribute at least 90% of its taxable income to shareholders each year.2Office of the Law Revision Counsel. 26 USC 857 – Taxation of Real Estate Investment Trusts and Their Beneficiaries
Where FSRNX and FREL Actually Differ
Expense Ratio
FSRNX charges 0.07%, or $7 a year per $10,000 invested.1Fidelity Investments. Fidelity Real Estate Index Fund – FSRNX FREL charges 0.084%, or $8.40 per $10,000. On a $100,000 balance, that’s about $14 a year. Small, but it compounds, and it points at FSRNX for a pure cost comparison.
How Orders Execute
FSRNX prices once per day at the market close. You order in dollar amounts, and the fund figures out how many shares that buys after the closing NAV is set. FREL trades on an exchange like a stock. You order in share quantities, you see a live price, and you can use limit orders to control what you pay. For a lump-sum contribution to a retirement account, the difference is negligible. If you want to buy on a dip during the trading day or set a price ceiling, that’s a job for FREL.
Minimums
FSRNX has no minimum initial investment.1Fidelity Investments. Fidelity Real Estate Index Fund – FSRNX FREL requires at least one share, roughly $27 at recent prices. Either fund is effectively open to any investor.
Short-Term Trading Fee
Fidelity may charge a short-term trading fee on mutual fund shares sold shortly after purchase. FREL, as an ETF, doesn’t carry that fee, though you’ll still pay the bid-ask spread on any trade. For a multi-year holder, this doesn’t matter. For someone who might sell within weeks or months, FREL is the cleaner instrument.
Dividend Reinvestment Default
FSRNX reinvests dividends and capital gains into additional shares automatically. FREL pays dividends as cash by default. You can flip either setting inside your Fidelity account under Positions, then Manage Dividends.3Fidelity. How to Reinvest Dividends and Capital Gains Because REIT funds throw off substantial income, reinvestment matters. If you buy FREL, change the setting before your first distribution.
Which Account You Hold It In Matters More Than the Ticker
Most dividends from a REIT index fund are ordinary (non-qualified) dividends, taxed at your full marginal income tax rate rather than the lower long-term capital gains rate that applies to qualified dividends from most stock funds. Federal ordinary rates top out at 37%.4Internal Revenue Service. Federal Income Tax Rates and Brackets Section 199A lets you deduct up to 20% of qualified REIT dividends, and that deduction was made permanent by the One Big Beautiful Bill Act.5Internal Revenue Service. Qualified Business Income Deduction Higher earners also face the 3.8% net investment income tax above $200,000 (single) or $250,000 (married filing jointly), which applies to REIT dividends.6Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax
The upshot: REIT index funds are one of the least tax-efficient things you can hold in a regular taxable brokerage account. Placing them inside a tax-advantaged account removes or defers that annual tax drag.
- Roth IRA. Dividends grow and are withdrawn tax-free in retirement. The best home for a REIT fund. The 2026 IRA contribution limit is $7,500, or $8,500 if you’re 50 or older.7Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- Traditional IRA. Dividends are tax-deferred; withdrawals in retirement are taxed as ordinary income. Same contribution limits.
- 401(k) or 403(b). If your employer plan offers a REIT index option, the same deferral logic applies. The 2026 elective deferral limit is $24,500.7Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
Some REIT distributions are classified as return of capital rather than income. Those aren’t immediately taxable, but they reduce your cost basis, which increases the capital gain you’ll report when you eventually sell. You defer tax now and pay at capital gains rates later, but you have to track the basis adjustments.
Risks to Weigh Before Buying Either
Interest Rate Sensitivity
When interest rates rise, REIT share prices often fall in the short term. Higher yields elsewhere make REIT dividends less attractive, and higher borrowing costs squeeze property companies carrying debt. Over longer periods, though, REITs have posted positive average returns in low, medium, and high interest rate environments from 1992 through 2024.8Nareit. REITs Historically Outperform in Different Interest Rate Environments
Concentration
The index is market-cap weighted. In early 2026, the top ten holdings accounted for close to half the fund’s assets. The 25/25 cap keeps any single company from dominating, but it doesn’t insulate the fund if a whole subsector, like data centers or industrial warehouses, falls out of favor.
Not the Same as Owning Property
Shares in a REIT index fund don’t give you the tax benefits of direct real estate ownership. No depreciation deductions, no 1031 exchanges, no say in what gets bought or sold. In exchange you get diversification, daily liquidity, and no management to handle.
Boundary: These Funds Cover U.S. Real Estate Only
FSRNX and FREL both invest exclusively in U.S. companies. If you’re looking for international real estate exposure, neither fund provides it, and Fidelity does not currently offer a low-cost international REIT index fund.
Placing the Order at Fidelity
Open a Fidelity account if you don’t already have one, choosing the account type that fits the tax analysis above. Link a bank account and fund it.
To buy FSRNX, search the ticker, select Buy, and enter a dollar amount. The order fills at that day’s closing NAV.
To buy FREL, search the ticker and place a stock order in share quantities. A market order fills at the current price. A limit order sets the most you’re willing to pay and gives you more control, especially during volatile sessions.
Once the trade settles, open Positions and go to Manage Dividends to confirm your reinvestment preference.3Fidelity. How to Reinvest Dividends and Capital Gains FSRNX reinvests by default. FREL pays cash unless you change it.