Is now a good time for traders and advisors to consider amplifying their real estate exposure?
There are a few crucial factors that may support doing so. To start, exposure oftentimes can help a portfolio diversify its opportunity set for returns. This can help advisors and investors reduce their correlation to the equity market, which may now be more valuable than ever.
Additionally, real estate investing has been traditionally viewed as a potential hedge for inflation. Concerns over inflation remain rampant in the market, creating more demand for strategies than can blunt some of this potential risk.
Another factor worth considering is how potential interest rate cuts from the Federal Reserve could benefit investors in the sector. Lower rates could lead to more affordable homeownership opportunities and stronger demand from buyers. This could open up opportunities for investors to cash in on lower interest rates through avenues outside of traditional equity and fixed income markets.
Despite all this good news, there are some headwinds that the real estate market could be facing later this year. Principally, the risk of the U.S. entering a recession continues to loom over investment decisions. If a recession plays out, the real estate market could be exposed to a significant downturn.
What AVRE Could Offer for a Real Estate Portfolio
Regardless of whether the macro environment is favorable or unfavorable for the real estate sector, active ETFs have a lot to offer. For instance, take a look at the Avantis Real Estate ETF (AVRE ).
AVRE looks to build long-term returns through an active portfolio of real estate investments. Through active management, the fund can provide similar diversification benefits to an index, but retain the flexibility to seek individual securities that can outperform an index. This can help AVRE outperform its benchmark, even when times could be favorable for traditional real estate strategies.
As of May 31st, 2025, AVRE’s NAV is outpacing that of its benchmark, the S&P Global REIT Index. These results speak volumes to how AVRE and its portfolio team can use the active ETF wrapper to outpace traditional real estate strategies.
The benefits of active management don’t stop at outperformance, either. If a recession plays out, AVRE’s active portfolio team could be able to adapt more effectively than a traditional indexed strategy could. In periods of economic downturn, flexibility and efficiency could prove to pay off in the long run.
Flows data shows how investors and advisors are turning to AVRE as a means to navigate opportunities in real estate. FactSet data shows that AVRE has seen over $24 million in net flows, as of May 30th, 2025.
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