As Rents Push Higher, Get Global REIT Exposure With This ETF

Rising rent prices can create opportunities for investors looking at real estate investment trusts (REITs) as an option. Exchange traded fund (ETF) provider Global X has an option that can provide this level of exposure on a global scale.

“Rent prices across the nation have soared nearly 30% since last year, according to a new report. As fears continue to swirl around the notion of a housing market crash, it seems rental prices have been an unforeseen externality,” an Investor Place article noted, citing the “The Complete 2022 Guide to Rental Prices in the US” report by Dwellsy.

According to the Dwellsy data, the average rent during August was up almost $500 versus the same time in 2021. Real estate, in general, following the apex of the pandemic in 2020 was seeing a sustained rise in prices, and that translated over into higher rent prices.

Constrained supply also had a hand in rising real estate, but prices have come back down as more supply increases and demand is fizzling out due to rising interest rates. Rent prices, however, haven’t followed the same economics as demand remains high.

Higher interest rates are translating to higher mortgages, making prospective homeowners think twice about purchasing. As such, this is raising the demand for rentals.

“Unlike homes for sale, however, the demand for rentals is at one of its highest levels in U.S. history,” the article added. “Indeed, with mortgage rates continuing to reach new highs, a growing number of Americans, especially families, are opting to rent rather than pay the costly mortgage premium to buy. As such, rentals are more or less in the same place housing was just a year ago. Sky-high demand, met with limited supply, generally equals unbridled price growth.”

Global REIT Exposure

Investors sensing an opportunity can look at the Global X Super Dividend REIT ETF (SRET), which, as mentioned previously, focuses on REITs with a global reach. The fund seeks investment results that correspond generally to the price and yield performance of the Solactive Global SuperDividend REIT Index, which tracks the performance of REITs that rank among the highest-yielding REITs globally, as determined by Solactive AG, the provider of the underlying index.

Highlights of SRET:

  • High income potential: SRET accesses 30 of the highest-yielding REITs in the world, potentially increasing a portfolio’s yield.
  • Monthly distributions: SRET has made monthly distributions for seven years running.
  • Global exposure: SRET invests in REITs from around the globe, which can help diversify both geographic and interest rate exposure.

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