Rate cuts have come and gone and with that change, many investors may be reevaluating portfolios for the end of the year. In equities, big tech names still lead the way, while in fixed income, dropping rates could change the outlook. Without a clear signal, then, it could be worth revisiting one underrated area in the form of REITs. The real estate investment trusts (REITs) offer a different set of benefits to traditional fixed income or equities, available in one standout active REITs ETF.
See more: How This Surprising ETF’s Approach Can Stand Out for Rate Cuts
REITs provide investors the opportunity to get a few important boosts for their overall portfolio. They offer a steady stream of income by providing exposure to firms that own, manage, or finance income-producing properties. What’s more, that real estate focus offers some intriguing diversification via exposure to real estate.
A recent webinar discussion saw VettaFi head of research Todd Rosenbluth talk REITs with SS&C ALPS Advisors Senior Investment Specialist Karl Zeller and GSI Capital Advisors Chief Investment Officer Nick Tannura.
While REITs have trailed equities by -11.7% over the last five years, they discussed, market sentiment towards REITs and real estate may be more negative than called for. That could offer an intriguing entry point for investors. REITs offer diversification within their own holdings, for example, with data centers and health care offices offering some upside from two different angles. REITs, they discussed, also offer strong balance sheets and somewhat more attractive capital costs.
The ALPS Active REIT ETF (REIT ), then, could make for a worthwhile ETF to watch. The strategy hit its three-year ETF milestone this February. Charging 68 basis points (bps), it actively invests in U.S. REITs. The active REITs ETF also invests in some common equity of U.S. real estate operating firms and preferreds from U.S. REITs. REIT has returned 7.25% over one year on an annualized basis. The active REITs ETF could be worth a look for those wanting diversification and income boosts to their portfolio.
For more news, information, and analysis, visit the ETF Building Blocks Channel.
