Real estate is a prime example of a sector that needs some refreshing, but not all related exchange traded funds answer that call.
The Goldman Sachs Future Real Estate and Infrastructure Equity ETF (GREI) is a real estate ETF for a modern investing landscape and not simply because the fund is new in this category. With infrastructure and real estate serving as foundations for a variety of secular growth themes, GREI is all the more relevant today for investors wanting to tap into growth areas in market segments not often associated with such traits.
“The real estate and infrastructure asset class is being rapidly reshaped by secular growth trends including innovation, environmental and social sustainability, experiences over things and demographic shifts,” according to Goldman Sachs Asset Management (GSAM).
As GSAM notes, real estate investing is often associated with lower correlation to stocks and bonds, above-average dividend yields, and favorable volatility traits. However, investors don’t often think of real estate as being innovative. GREI bridges that divide, providing market participants with a best-of-both-worlds, modernized real estate solution with the convenience of the ETF wrapper.
“Rapid advancements in technology are dramatically changing the world. But in our view, traditional, market-cap weighted benchmarks are over-concentrated in a few names and are backward-looking, allocating too much capital to past winners and leaving investors potentially underexposed to future winners,” added GSAM.
To those points, GREI can potentially shine because it’s actively managed, making it something of a standout in a landscape littered with passively managed funds. In the real estate sector in particular, old guard, passive, cap-weighted ETFs often deliver on the promise of above-average dividends, but they do so at the expense of not being adequately allocated to real estate and infrastructure growth stories.
Owing to its status as an actively managed ETF, GREI offers flexibility that traditional rivals lack, enabling investors to stay on the right side of real estate disruption. As such, GREI’s managers can also steer investors away from companies that are vulnerable to that disruption and ones that run the risk of one day becoming obsolete.
“GREI invests in both real estate and infrastructure, as we believe combining the two provides strong return potential for investors while avoiding unintended concentration risk, since they have similar investment attributes, but different demand drivers,” concluded GSAM.
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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.