Real estate is a prime example of a sector that could use some refreshing, and that’s particularly true of many of the related exchange traded funds.
In recent years, some real estate ETFs modernized the sector for everyday investors. Add the WisdomTree New Economy Real Estate Fund (WTRE) to that list. WTRE, which tracks the CenterSquare New Economy Real Estate Index, came to market on Wednesday, replacing the ETF formerly known as the WisdomTree Global ex-U.S. Real Estate Fund (DRW).
An ETF’s underlying index is always relevant to advisors and investors, but WisdomTree’s relationship with CenterSquare in the context of WTRE is particularly important.
“To capture this exciting thematic investment opportunity within New Economy real estate, WisdomTree is collaborating with CenterSquare Investment Management LLC (CenterSquare), a global investment manager focused on actively managed public and private real estate, equity, and private real estate debt strategies. CenterSquare’s management team has an average of 30+ years of experience, with expertise across real assets and the liquidity spectrum,” writes WisdomTree’s Kara Marciscano.
WTRE checks another important box regarding new ETFs: It differentiates itself from established rivals. While the real estate ETF space is chock full of entrenched funds, many lack adequate exposure to the new breed of real estate investment trusts (REITs).
Those include owners of industrial REITs, data centers, telecom tower REITs, and life sciences landlords — the growthier parts of the real estate sector. WTRE focuses on those REITs while identifying the names with the strongest balance sheets.
“WisdomTree believes that technology-focused real state exposure represents an increasingly important component of the future real estate market,” adds Marciscano. “Built into WTRE’s strategy is a screen that targets companies with high technology exposure and strong balance sheets.”
CenterSquare and WisdomTree aren’t just talking a big game when it comes to modernizing real estate ETFs — they’re backing it up. For example, WTRE’s underlying index allocates about 78% of its weight to logistics REITs, tower/telecom names, and data centers. The U.S. benchmark devotes just 35.5% of its weight to such REITs. Beyond that, WTRE offers more benefits.
“WTREs weighting mechanism is designed to form a portfolio of securities that are technology focused and have attractive growth and valuation characteristics relative to the investable universe. The index methodology assigns a higher weight to companies with (1) stronger technology scores, (2) higher earnings, dividend and cash growth (3) and more attractive valuations relative to their levels of cash flow, earnings and dividends,” concludes Marciscano.
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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.
