A real estate ETF (or real estate fund) primarily invests in real estate, either physically or by means of financial securities in which a basket of real estate investments is an underlying. Real estate funds typically invest in REITs and stocks that relate to real estate investments/ assets.

On the other hand, REITs (real estate investment trusts) invest directly in real estate and own, operate, or finance income-generating properties.

In short, real estate funds can invest in a wider range of underlying real-estate related securities, while REITs primarily invest in physical properties and issue their own stocks. In other words, the former is general, where investment involves different types of securities with exposure to real estate, including the latter, while the latter has its own investment structure involving direct direct exposure to the physical properties and their performance.