The tide could finally be turning in favor of real estate investment trusts (REITs) despite cooling home prices and rising interest rates. REITs were able to post a strong July despite the first half of 2022.
“Along with other equities, publicly-traded REIT stocks suffered a rough first half of 2022, but that picture began to change in July with the FTSE Nareit All Equity REITs index rising 8.6 percent,” a Wealth Management article noted. “Entering the month, REIT total returns were down nearly 20 percent for the year, but July helped claw back some of that drop, leaving the index down 12.3 percent.”
“REITs have been bolstered by a strong second quarter earnings season, with many REIT executives reporting continued strong operating fundamentals,” the article added. “And investors have now largely priced in the effects of the Fed’s monetary policy.”
REITs offer a variety of opportunities that extend beyond residential property. As such, REITs can capture various corners of the real estate market that offer growth potential despite challenges in the housing market.
2 Options From Global X
Global X has a pair of funds to consider for a targeted approach to REITs, one of which is the Global X Super Dividend REIT ETF (SRET). SRET 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.
Additionally, SRET gives investors more diversification by looking at opportunities around the globe as opposed to staying within domestic borders. The fund screens for only the highest-yielding opportunities no matter what part of the globe that yield resides.
Another option to consider that falls outside the typical housing market is the Global X Data Center REITs & Digital Infrastructure ETF (VPN), which seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Data Center REITs & Digital Infrastructure Index.
VPN investors can get access to:
- High growth potential: VPN enables investors to access high growth potential through companies providing the digital infrastructure for 5G and next generation communication networks.
- REIT exposure: VPN invests in REITs, among other holdings, an asset class that has historically provided high income potential.
- ETF efficiency: In a single trade, VPN delivers access to dozens of companies with high exposure to the data center and digital infrastructure theme.
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