If you’ve been less than impressed by a tepid U.S. housing market, then you might want to look at the real estate sector in emerging markets. But how about more exchange traded funds (ETFs) for it?
Dr. David Lynn, author of Emerging Market Real Estate Investment: Investing in China, India, and Brazil, shared his insights as to why this class of asset is an attractive investment, reports Hao li for The International Business Times.
You’re probably well aware that the economic outlook for emerging economies is better than most developed ones. But that’s just one of a number of reasons to consider adding these hot markets to your portfolio:
- The growing affluence of the emerging market middle class means that they’re looking to buy bigger and nicer things. One of their purchases will be better residences. This should keep housing demand strong and supported by demand fundamentals. [China Real Estate ETFs May Be Undervalued.]
- These people also want to shop more. Don’t be surprised if that leads to a boom in the construction of retail stores and malls.
- Lastly, the growing wealth of the middle class should give a healthy boost to the hospitality and tourism industries, which means the construction of more hotels and resorts.
Unfortunately, this interest in international real estate hasn’t translated into more ETFs focused on emerging market housing activity. The major funds hold developed countries, primarily across Europe and Asia.
The lone fund that can give any such exposure is Guggenheim China Real Estate (NYSEArca: TAO). Given its respectable level of assets and strong performance in the last year, as well as the strong appeal of funds that drill down into specific emerging market sectors, perhaps we’ll see more funds like it in the future. [How to Choose Among the Many China ETFs.]
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.