The first rate cuts have come and gone, improving the prospect of a so-called “soft landing” for the U.S. economy. Of course, cheaper borrowing doesn’t just benefit consumption, it also benefits certain economic segments disproportionately. Debt costs for capital intensive sectors like real estate come down, too, as rates drop. While the space hasn’t had a great year overall, one active real estate ETF is signaling a buy amid a resurgence for the sector.
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That fund, the Avantis Real Estate ETF (AVRE ), also recently hit its three-year ETF milestone. The strategy launched in late September, 2021. Charging a small fee for an active fund at 17 basis points (bps), the active real estate ETF has returned 30.8% over the last year. According to data from Avantis Investors, it beat its benchmark by about 30 bps in that time frame.
AVRE's Active Real Estate ETF Approach
Per YCharts data, AVRE’s price has risen above its 50-day Simple Moving Average (SMA), which traditionally indicates some healthy momentum. Moreover, its price sits below a recent resistance point and below its highest point this year, suggesting some further room to grow.
AVRE looks at global real estate stocks, including REITs and REIT-like entities, included in the benchmark index of the S&P Global REIT Index. It considers a firm a real estate company if at least half of revenue or market value stems from ownership, construction, management, or sale of real estate.
With rates potentially poised for further cuts early next year, real estate could benefit even more. Domestic policymakers may also unlock further real estate construction in the coming years, boosting the outlook for housing construction. For those looking to diversify into a traditional real estate alternative, the active real estate ETF AVRE’s low cost and momentum could intrigue.
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