The real estate sector was beset by bad news in the first half of the year, but with many market observers believing the worst is over for the group, investors may want to revisit ETFs, such as the FlexShares Global Quality Real Estate Index Fund (GQRE).
GQRE targets the Northern Trust Global Quality Real Estate Index, a fundamentally-weighted index that focuses on commercial and residential REITs. Mortgage REITs, real estate finance companies, mortgage brokers and bankers, commercial and residential real estate brokers, and real estate agents and home builders are among the securities excluded from the index.
Low-interest rates thanks to the Federal Reserve electing to keep interest rates near zero through the year 2022 can give rookie real estate investors the opportunity to diversify their portfolios with tangible, real assets. However, not everyone can own a piece of real estate just yet and one option can be real estate investment trusts (REITs) and ETFs such as GQRE.
Real estate-focused ETFs can offer investors exposure to the asset class without being a landlord or putting down large amounts of cash. Additionally, it gives investors exposure to commercial, residential or both types of real estate.
Fixed income investors know that yield is hard to come across these days—unless investors are willing to take on more risk by accepting more duration in safe haven government debt, opting for high yield, or looking at opportunities overseas—to name a few. On the other hand, GQRE offers an alternative to those prosaic income-generating assets.
Another plus for GQRE is its global exposure, which levers the fund to easy monetary policy by central banks beyond the Federal Reserve.
GQRE also features significant ex-US exposure, a trait that should serve the fund as a slew of central banks besides the Federal Reserve consider lowering interest rates. While REITs are trading at the higher end of historical valuation ranges, the group is generating robust cash to support dividend hikes.
Investment volumes fell across all parts of the globe—the Americas, Asia Pacific and Europe. While a recovery is expected, analysts expecting varying degrees of a rebound underscoring advantages with GQRE’s broad-based lineup.
Up 22% over the past six months, GQRE yields a tempting 5.26%.
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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.