Low interest rates could be a prime motivator when it comes to home buyers. In conjunction with social distancing measures, this could bring more prospective purchasers looking to leave heavily populated metropolises, particularly millennials.
“Americans are fleeing big cities as the COVID-19 pandemic sparks a newfound appreciation for socially-distanced space in the suburbs,” a Fox Business report noted. “The mass migration has created an opportunity for millennials and other first-time home-buyers, in particular, to take advantage of record-low mortgage rates and work-from-home opportunities, as long as they can outbid their peers in the urban diaspora.”
“It is a competitive environment among buyers,” Dr. Lawrence Yun, chief economist at the National Association of Realtors, told FOX Business. “The good news is that mortgage rates are low.”
Exchange-traded investors looking to cash in on this trend can look to funds like the Xtrackers International Real Estate ETF (HAUZ), which seeks investment results that correspond generally to the performance of the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index. iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index is a free-float capitalization weighted index that provides exposure to publicly traded real estate securities in countries outside the United States, Pakistan, and Vietnam.
The MSCI All Country World Index (ACWI) ex-USA is a market-capitalization-weighted index designed to provide a broad measure of stock performance throughout the world by tracking the performance of 22 developed and 24 emerging markets.
Another fund to look at is the Vanguard Real Estate ETF (NYSEArca: VNQ). VNQ seeks to provide a high level of income and moderate long-term capital appreciation by tracking the performance of the MSCI US Investable Market Real Estate 25/50 Index that measures the performance of publicly traded equity REITs and other real estate-related investments.
Tracking Millennial Trends
Investors looking to capitalize on the latest and greatest in millennial market preferences is the Principal Millennials Index ETF (GENY). The fund seeks to provide investment results that closely correspond, before expenses, to the performance of the Nasdaq Global Millennial Opportunity Index.
Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies that compose the index at the time of purchase. The index uses a quantitative model designed to identify equity securities of companies in the Nasdaq Global Index (the “parent index”) that are impacted by the spending and lifestyle activities of the Millennial generation, which refers to people born from 1980 to the mid-2000s.
For more market trends, visit ETF Trends.