Some market observers believe real estate equities are on the cusp of something significant. Investors can get active on that trend with the newly minted ALPS Active REIT ETF (NASDAQ: REIT).
The new research-driven, high conviction REIT is managed by GSI Capital Advisors. While REIT does disclose 100% of its portfolio names daily, it doesn’t disclose the correct portfolio % weightings. That is how GSI’s daily alpha strategy is obscured. By keeping certain information about the ETF portfolio secret, this ETF does not allow other traders to predict or copy its investments strategy.
See also: Top 47 Real Estate ETFs
For investors considering REIT, there’s a value proposition to be had.
“Despite the strong relative price performance from January lows, US REITs remain relatively cheap by historical standards,” said Canaccord Genuity’s Martin Roberge in an interview with Barron’s.
‘REIT’ As a Hedge Against Inflation
With inflation rising, the real sector beckons because many real estate investment trusts (REITs) enjoy some level of pricing power, and have contracts in place allowing for gradual rent increases over time – many of which exceed inflation on a percentage basis.
“REITs could also get a boost from rising inflation, Roberge explains, noting that they outperform all other sectors during periods when inflation is 2.5% or higher,” reports Ben Levisohn for Barron’s.
Two more reasons the new ALPS is worth considering over the near-term: First, REITs lob off superior levels of income relative to Treasuries, meaning REIT is a credible bond alternative in the current environment. Second, private equity companies love real estate investments.
“They could also get support from demand for real estate as a fixed-income replacement, according to Morgan Stanley’s analysts. Interest is coming from private-equity firms like Blackstone Group (BX), Apollo Global Management (APO), Carlyle Group (CG), and KKR (KKR), which could help put a floor under prices and support the broader group,” adds Barron’s.
Other REIT ETFs include the Schwab US REIT ETF (NYSEArca: SCHH) and the Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR).
For more on cornerstone strategies, visit our ETF Building Blocks Channel.
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.
