Pandemic Pushes Case for This REIT ETF | ETF Trends

The cloud computing and data center markets are actually growing against the backdrop of the coronavirus pandemic and that’s bolstering the case for the Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR).

The Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF is a strategy-driven ETF that aims to offer investors exposure to U.S. companies that generate the majority of their revenue from real estate operations in the data and infrastructure sector. There are significant real estate demands associated with the 5G rollout, enhancing the 5G ETF status of the Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF.

“The cloud market grew rapidly following the financial collapse of 2008, industry analysts note, and all signs point to a similar acceleration as the pandemic forces even more dependence on technology to support a homebound global workforce,” reports S&P Global Market Intelligence. “Since that growth can only happen by adding or changing the equipment in the data centers that support cloud services, companies that sell chips, data-storage units, networking equipment, and other data-center-class hardware are benefiting from the movement.”

More Growth on the Way

There is an array of growth catalysts backstopping SRVR, helping it outperform traditional REIT ETFs by wide margins this year.

Data and infrastructure real estate investment trusts (REITs) are pivotal pieces of the 5G puzzle and SRVR is the only fund explicitly dedicated to those REITs. With an expense ratio of 60 basis points, the ETF also offers dividends as a source of income to investors. Additionally, there’s an element of environmentally responsible investing with data centers.

“After the 2008 crisis, cloud computing continued to expand and to segment into specialty markets that ultimately helped millions of employees when demand for work-from-home capacity recently surged due to the pandemic,” according to S&P Global Market Intelligence. “Revenue for cloud infrastructure services grew to $29 billion during the first quarter of 2020, a 39% increase compared to 2019, according to an April 30 report from Synergy Research.”

Increased demand for data centers is another growth driver for SRVR.

“The migration to the cloud represents both a source of growth for the cloud-computing business and a reason to expand data-center capacity. That expansion is likely to continue to grow even after demand created by pandemic-related work-from-home arrangements slows, said Melanie Posey, a research vice president at 451 Research,” according to S&P Global Market Intelligence.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.