Investing in real estate overall hasn’t been the easiest time in 2023. A combination of rising rates and a changing approach to work in the United States has impacted both residential and commercial real estate. Investors can still find significant opportunities within the real estate world, however. Recent earnings news for 2023 standout firm Nvidia (NVDA) underscores the case for a tech real estate ETF. One such strategy, the WisdomTree New Economy Real Estate Fund (WTRE ), may appeal.
NVDA’s sales have surged as AI’s big debut this year has significantly increased demand for the chips that the company produces. Those AI investments by fellow mega-cap tech firms Microsoft (MSFT), Amazon (AMZN), and others have helped push the firm’s sales to new highs. NVDA symbolizes a new tech real estate market that has proven a bright spot in an otherwise tough environment for real estate.
WTRE tracks a tier-weighted index of global real estate firms that meet a technology score. The fund assesses firms’ revenue from tech, life sciences, and R&D work either directly or through tenants. It also assigns a score based on whether a real estate company or its tenants enable or relate to science, e-commerce, or “new economy” logistics. WTRE then weights firms based on market cap while looking to exclude firms with debt to total market-cap above 70%.
Data Centers, AI, and the Tech Real Estate ETF
Together, that approach has helped WTRE to return 11.8% over the last month, a significant spike on top of YTD outperformance. The fund has outperformed both its ETF Database Category and FactSet Segment averages.
The strategy charges 58 basis points to track the CenterSquare New Economy Real Estate Index. With news that MSFT is investing billions to build out AI datacenters, WTRE could be positioned as an ETF to watch entering 2024.
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