Real estate investing has been a complicated space this year. Commercial real estate remains a challenged area with a lot going against it. What’s more, the interest rate picture remains a source of uncertainty, while materials costs, too, are posing problems. One area that has done very well, however, has been the “new” economy real estate market. Most investors understand the huge boom in data center construction, but the category is more than that, with the top performing real estate ETF this year embracing that space.
That fund, the WisdomTree New Economy Real Estate Fund (WTRE ), has outperformed all other real estate ETFs YTD, per ETF Database. The top performing real estate ETF has returned more than double the next highest-performing ETF, according to that data set. The strategy has returned 34.6% YTD, compared to 14.7% for the next-highest fund, the Global X SuperDividend REIT ETF (SRET ).
WTRE charges a 58 basis point fee for its approach. So how, then, has it provided those returns? The top performing real estate ETF provides an intriguing index-based approach. The fund tracks a tier-weighted list of real estate firms with either direct or indirect exposure to the “new economy.” That includes firms exposed in some way to technology, science, or e-commerce. The index’s operators assign a “technology score” to potential investments, measuring thematic exposure by factors like revenue.
New Economy Investments in WTRE
Together, that has helped WTRE to invest in names like the Goodman Group (GMG). GMG has returned 33.5% over the last six months for investors. The company, headquartered in Sydney, Australia, focuses on logistics and distribution centers, business parks, data centers, and more.
WTRE also invests in companies like satellite developer AST SpaceMobile, Inc. (ASTS). ASTS has returned 236.9% YTD, a significant return for the ETF and the stock’s investors. ASTS’s focus on developing cellular broadband in space has drawn significant attention from the market and could be poised for continued growth.
Looking ahead, WTRE could provide not only a strong real estate ETF, but also a nice diversifier into an alternative category. As the real estate picture itself continues to look uncertain, WTRE may intrigue.
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