Fixed-income investors worry about the negative effects of inflation on their real yields, but some may consider real estate as an alternative yield-generating option to hedge against inflationary pressures and potentially generate attractive returns and growth in the environment ahead.
On the upcoming webcast, The Secret to Investing in Real Estate ETFs, Kevin Davis, Chief Growth Officer for Vident Financial, Jerry Bowyer, Chief Economist for Vident Financial, Andrew Alden, Head of Quantitative Research for WeatherStorm Capital, and Fred Stoops, Head of Real Estate Investments for Vident Financial, will delve into real estate as an alternative asset to diversify a fixed-income portfolio.
For example, ETF investors may consider something like the U.S. Diversified Real Estate ETF (NYSE Arca: PPTY) to gain diversified exposure to real estate investment trusts and the yield opportunities that this segment of the market presents.
The U.S. Diversified Real Estate ETF is a rules-based fund that uses stable geographic and property type targets to provide diversified exposure to U.S. real estate, according to Vident. The portfolio is constructed based on the actual properties held by each company. The focus on underlying real estate allows the ETF to deliver consistent exposure and reliable diversification.
“Difference between property types matter – apartments and offices are very different investments,” according to a Vident note.
“Our largest allocations are to core property types such as residential, office, industrial, retail and diversified due to their strong track record of delivering the stabel income, inflation protection, and growth investors seek in real estate,” Vident added.
Leverage and governance factors are further included to reduce exposure to higher risk companies. The responsible use of leverage can potentially enhance returns, but taking on too much debt is risky, so the portfolio includes companies with prudent leverage. Additionally, firms with significant governance risks like external management are excluded from the portfolio to diminish further unknowns.
Financial advisors who are interested in learning more about the real estate sector can register for the Thursday, May 31 webcast here.