As a standalone sector, real estate is just several years old, and it’s one of the smaller sector weights in the S&P 500. That said, equity real estate investing has served investors well for decades.
Real estate stocks, and real estate investment trusts (REITs) in particular, often deliver above-average dividend yields that make them sound alternatives to bonds and offer impressive inflation-fighting potential, among other compelling traits.
Still, the sector and its related investments are in need of some refreshing and modernizing. The newly minted Goldman Sachs Future Real Estate and Infrastructure Equity ETF (GREI) delivers those updates. GREI debuted earlier this month as part of a trio of exchange traded funds from Goldman Sachs that tap into innovative investment concepts. The other two are the Goldman Sachs Future Health Care Equity ETF (GDOC) and the Goldman Sachs Future Consumer Equity ETF (GBUY).
GREI helps investors “gain exposure to the unique attributes of real estate and infrastructure – attractive yield, strong growth potential, low correlations to traditional asset classes, and inflation-hedging benefits while focusing on assets which we believe are on the right side of disruption,” according to Goldman Sachs Asset Management (GSAM).
The fundamental equity team at Goldman Sachs constructs the GREI lineup, which currently stands at 46 members. GREI is a departure from old guard real estate ETFs because the rookie fund features exposure to newer, burgeoning real estate concepts such as 5G, data centers, and shoring up the power grid.
The new ETF focuses on multiple themes, including demographic shifts, experiences over things, environmental sustainability, innovation, and social sustainability.
“The Key Themes and related areas of investment may change over time at the sole discretion of the Investment Adviser without prior notice to shareholders,” according to the GREI prospectus. “In addition, the Fund is permitted to make investments that are not aligned with the Key Themes. In selecting investments, the Investment Adviser will not seek to allocate a specified portion of the Fund’s portfolio to each particular Key Theme, and the allocation of the Fund’s investments across the Key Themes will vary over time in the Investment Adviser’s sole discretion. The Fund may not allocate its investments to each Key Theme at all times and an investment may be aligned with multiple Key Themes at the same time.”
Cutting down on that legal jargon, GREI offers more flexibility and versatility than a traditional real estate ETF. To that end, GREI isn’t a dedicated real estate ETF. In addition to a 57.5% weight to that sector, the fund allocates a combined 36.6% to the utilities and industrial sectors.
For more news, information, and strategy, visit the Future ETFs 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.