The narrative of transient inflation has fallen to the wayside as the capital markets expect inflation to hang around longer than expected. There are a plethora of options to hedge away inflation, including global real estate exposure.
Since the pandemic, real estate prices around the world have been trending higher as social distancing measures have forced an increased use of homes as live/work havens. This was a global phenomenon as more consumers stayed home and used the internet for purchasing goods and services.
It’s difficult to forecast what real estate prices will do in the coming months, especially with rising rates giving home buyers a reason to wait on the sidelines. Nonetheless, if forced to place a bet, it seems like the best option is to bank on more price increases for real estate.
“Every major real estate firm with a publicly available forecast, including CoreLogic and Fannie Mae, predicts that home prices will go even higher over the coming year,” Fortune reports.
Getting Global Real Estate Exposure in 1 Fund
Investing in tangible real estate certainly has its challenges, especially when it comes to global exposure. An easier way is via an exchange traded fund (ETF) such as 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, before fees and expenses, 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.
While most of its holdings reside in the U.S., investors get that global twist with holdings from other countries. That list includes Japan, Australia, Hong Kong, and Germany.
“Investing in the real estate sector offers the potential to add growth, diversification, income along with potential protection against the risk of long-term inflation to a portfolio,” a FlexShares Fund Focus article says. “We believe that a well-diversified and global approach to real estate investing is a key factor in unlocking the full range of these potential benefits.”
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