Columbia Threadneedle Investments launched the Columbia Research Enhanced Real Estate ETF (NYSE Arca: CRED), which gives investors exposure to the real estate sector in a thoughtful, accessible way. The strategy incorporates the firm’s research and insights into real estate.
CRED seeks investment results that, before fees and expenses, closely correspond to the performance of the Beta Advantage Lionstone Research Enhanced REIT Index. Its index is designed to outperform the FTSE Nareit All Equity REITs Index through research-driven security selection and modified market cap weighting that emphasizes income and geographic opportunity.
The index’s methodology leverages Lionstone Investments’ and Columbia Threadneedle’s research and insights to score and weight each constituent within the FTSE NAREIT All Equity REITs Index on such factors as liquidity, income, geographic exposure, quality, value, catalyst, and research rating.
A recent Columbia Threadneedle Investments survey found that income diversification and generation were among the top reasons why financial advisors allocate to real estate. The survey also found that 9 out of 10 financial advisors consider underlying geographic exposure when investing in real estate investment trust (REIT) strategies.
CRED’s weighting approach is meant to address these financial advisor preferences towards real estate investing expressed in this survey.
“Real estate has long played an important role in portfolio diversification, and there are many ways to access the asset class across the liquidity spectrum,” said Columbia Threadneedle’s head of strategic beta Marc Zeitoun in a news release. “With the launch of CRED, we are offering investors and allocators a differentiated, research-driven way to improve their benchmark exposures to real estate.”
Zeitoun added: “Columbia Threadneedle has significant global real estate investment capabilities that span the entire capital structure, and we are committed to offering this expertise in a variety of solutions, from strategic beta to direct real estate investment, to suit specific client needs.”
Managed by Christopher Lo and Henry Hom, portfolio managers in Columbia Threadneedle’s managed and indexed portfolio solutions team, CRED is designed to serve as a core allocation to the U.S. real estate sector in an investment portfolio. The fund’s index will typically consist of 70 to 90 REITs weighted across eight sectors, including specialized, industrial, diversified, hotel & resort, residential, retail, office, and healthcare REITs.
“Columbia has a strong research heritage to leverage to support this dividend-paying investment style,” said Todd Rosenbluth, head of research at VettaFi.
CRED carries an expense ratio of 33 basis points. With the launch of this fund, Columbia Threadneedle now manages 12 ETFs.