The ALPS REIT Dividend Dogs ETF (NYSEArca: RDOG) is a diversified real estate exchange traded fund, but unlike its legacy peers, RDOG has compelling exposure to some of the faster-growing segments of the sector, including industrial real estate investment trusts (REITs).
RDOG equally weights nine REIT segments, effectively increasing exposure to desirable areas, such as industrial and technology REITs, while lowering allocations to retail and hotel REITs relative to traditional competitors.
RDOG also has an almost 12% weight to industrial REITs, a group benefiting in significant fashion from the e-commerce boom, a shift amplified by the coronavirus pandemic.
“Demand for industrial real estate is surging as the coronavirus pandemic causes businesses to rely on e-commerce and domestically manufactured products to accelerate supply-chain efficiencies,” reports Sumner Park for FOXBusiness.
A Good Time for RDOG ETF
Due to longer-ranging shifts in the real estate business, RDOG could potentially be a winner over the long-term because of the changes being created by the coronavirus.
Currently, e-commerce and online shopping represent about 10% of overall U.S. retail sales, a number that is expected to continue growing in the years ahead. The sudden rise of online giant retailers like Amazon has increased demand for warehouses to store inventory. Around 25% to 30% of warehouse space is currently dedicated to e-commerce.
While some analysts are speculating that industrial REITs could be confounded by weakening consumer confidence on par with retail ETFs, other data points suggest RDOG is positioned to endure retail weakness. In fact, thanks to the e-commerce boom, the ETF is poised to thrive as shoppers move online.
Anecdotal evidence confirms RDOG’s industrial exposure is a meaningful consideration for investors.
“Brennan Investment Group, a private real estate investment firm that acquires and operates industrial properties with a national portfolio, has seen a new class of tenants, from e-commerce to automated manufacturing to cold storage, that has been active in the market,” reports FOX. “New levels of tenant leasing activity coming from the rising sector have helped keep Brennan’s buildings full. Since the outbreak of the pandemic, occupancy levels have remained robust at 97.5%, and there has been a high propensity for renewal, with retention rates at 90%. Rent collections have ranged between 97% and 99%, a testimony to the fact that these buildings, whether warehouses or factories, are critical facilities.”
Other real estate funds include the FlexShares Global Quality Real Estate Index Fund (GQRE) and the Schwab US REIT ETF (NYSEArca: SCHH).
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