As Real Estate Prices Appreciate, Get Alternate Exposure With GQRE

Amid the pandemic last year, real estate changed as private homes accommodated work-from-home employees and prices soared — one way to capture this trend is a global real estate ETF like the FlexShares Global Quality Real Estate Index Fund (GQRE).

Per the fund description, GQRE seeks investment results that generally correspond to the price and yield performance of the Northern Trust Global Quality Real Estate Index. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to quality, value, and momentum factors relative to the Northern Trust Global Real Estate Index.

Price appreciation continues to be the norm for real estate, and market experts don’t expect it to stop with the new year around the corner. If the U.S. real estate market serves as the bellwether, then global markets should follow the same trend.

“We’re seeing home price appreciation at the highest it’s ever been,” said Alexandra Lee, an economist at Zillow Group. “The housing market is tough out there. Expect a little bit more breathing room, but buyers should really be prepared for a competitive market to continue in 2022.”

“That’s a monumental amount of home price growth,” Lee said. “Now it’s at 17% year-over-year as of October. We expect that to continue slowing down into 2022.”

A Broad Real Asset Option

ETF investors looking for more diversification beyond just real estate can look to a fund like the FlexShares Real Assets Allocation Index Fund (ASET). As opposed to holding multiple assets like precious metals or commodities like oil, ASET can give investors exposure to it all through one position.

Additionally, price volatility is minimized due to ASET holding companies that represent real asset exposure instead of the actual tangible assets themselves. Per its fund description, ASET seeks investment results that correspond generally to the price and yield performance of the Northern Trust Real Assets Allocation Index, which measures the performance of an optimized allocation to the underlying funds that is intended to provide exposures to certain real assets and minimize the overall volatility of an investment in the underlying funds.

Investors can still get real estate exposure as the fund currently (as of December 10) holds 32% of its assets in real estate, while the next two largest holdings consist of industrials and utilities. Moreover, ASET takes a global approach by investing in countries outside of the United States as well, including Canada, the United Kingdom, and Japan.

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