As Real Estate Prices Appreciate, Get Alternate Exposure With GQRE
Amid last year’s pandemic, real estate has changed as private apartments work from home and prices have risen – one way to capture that trend is with a global real estate ETF like that FlexShares Global Quality Real Estate Index Fund (GQRE).
According to the fund description, GQRE aims to achieve investment results that generally correspond to the price and return performance of the Northern Trust Global Quality Real Estate Index. The Index is designed to reflect the performance of a selection of companies that have greater overall exposure to quality, value and momentum factors compared to the Northern Trust Global Real Estate Index.
Price increases are still the norm for real estate and market experts do not expect them to be around the corner in the new year. With the US housing market as a guide, global markets should follow the same trend.
“We are seeing the rise in home prices higher than ever before,” said Alexandra Lee, an economist at the Zillow Group. “The housing market is tough out there. Expect a little more air to breathe, but buyers should really be prepared for the fact that the market will continue to be highly competitive in 2022. “
“That’s a huge spike in home prices,” said Lee. “Now it’s 17% year-on-year in October. We expect this to slow down further until 2022. “
A broad real asset option
ETF investors looking for more diversification than just real estate can go to a fund like this FlexShares Real Assets Allocation Index Fund (ASET). Instead of holding multiple assets like precious metals or commodities like oil, ASET can allow investors to get exposure to all areas through one position.
In addition, price volatility is minimized by ASET holding companies, which represent real assets and not the actual tangible assets themselves. According to its fund description, ASET seeks investment results that generally correspond to the price and return performance of the Northern Trust Real Assets Allocation Index, which is the performance measures an optimized allocation to the underlying funds, which is intended to enable exposure to certain real assets, and to minimize the overall volatility of an investment in the underlying funds.
Investors can continue to get real estate exposure as the fund currently (as of December 10th) holds 32% of its assets in real estate, with the next two largest positions being industrials and utilities. In addition, ASET takes a global approach by also investing in countries outside of the United States, including Canada, the United Kingdom and Japan.
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