Value—it’s something investors are seeking in a world where viruses are serving heavy doses of volatility and when uncertainty reigns in the capital markets, capital allocation requires strict due diligence. As such, when it comes to diversification, real estate can offer value as a safe haven asset amid the uncertainty flooding today’s market.
“Most investors will be looking for a defensive wealth strategy by directing their investments toward safe havens, such as gold for more traditional investors, or bitcoin for the millennials,” a Forbes article stated. “However, real estate is the No. 1 tangible investment and a safe haven for all, especially when financial markets and Forex are in an unprecedented state of volatility. Real estate professionals can, therefore, expect to receive numerous requests from highly liquid investors looking for the best opportunities to safeguard their wealth.”
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-focused exchange-traded funds (ETFs).
A pair of real estate funds to consider:
- Xtrackers International Real Estate ETF (HAUZ) 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.
- 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.
Using a Multi-Factor Approach
Another way investors can allocate their capital in today’s market is via a multi-factor approach. One way investors can get multiple factor exposure, as well as international diversification, is via the Principal International Multi-Factor Core Index ETF (PDEV).
PDEV seeks to provide investment results that closely correspond to the performance of the Nasdaq Developed Select Leaders Core 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.
For more market trends, visit ETF Trends.