Many old guard real estate investment trust (REIT) exchange traded funds are just that: old guard. Modern approaches to the sector, namely the Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR), are more important and relevant for today’s ETF investors.
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 sectors. 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.
In fact, SRVR is deriving some benefit from the pandemic because data center demand continues to soar.
“The physical buildings that hold and store internet data have grown in necessity alongside the rise of technology and software giants. And like their so-called FAANG clients, the group has seen an acceleration during the coronavirus pandemic,” reports Maggie Fitzgerald for CNBC.
SRVR Growing But Still Underweight?
One of the primary benefits offered by the new SRVR is that many of its holdings are under-weighted or not found in traditional REIT ETFs.
“Shares of two of the largest U.S.-based data center players — Equinix and Digital Realty — have gained about 25% and 13% this year, respectively. The real estate companies are major beneficiaries from the Covid-19 pandemic, in an increasingly virtual world with businesses shifting operations online,” according to CNBC.
SRVR is home to cell tower REITs, data center REITs, and similar facilities – these cell towers and data processing centers store the information and handle the orders that start the e-commerce process, making the fund a diverse play on some of the most important emerging technological themes.
Data and infrastructure real estate investment trusts (REITs) are pivotal pieces of the 5G puzzle and SRVR is the original 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.
“Data centers are a unique sector of real estate because they require a specific geography as well as power capability that can’t be compromised,” reports CNBC. “Among the types of data centers, one type, called interconnection facilities, are growing more linearly because developers can’t create them from scratch.”
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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.
