Billions flood real estate via Wall Street – Orange County Register
Soaring property prices have caused investors to flock to the exchange-traded funds that track real estate industry profits.
Wall Street’s “” ETF “sector is well on its way to seeing its best month of inflows since at least 2014, adding nearly $ 3.9 billion, according to data compiled by Bloomberg.
BlackRock’s iShares US Real Estate ETF already raised $ 2.5 billion in June, putting it on track for its best month ever. Another BlackRock fund – the iShares Global REIT ETF – is heading for its best month of inflows since 2017.
Historic stimulus measures from central banks around the world and an accelerating economic recovery are driving prices up in every corner of the property market, fueling concerns about becoming a bubble. As workers return to the office, shoppers return to the shops, and restaurants fill up, the demand for a variety of items increases.
As a result, real estate stocks have skyrocketed. For example, the Wilshire US Real Estate Index is up 49% from its pandemic low, including an 18% increase this year’s first half.
“Real estate gains were broad-based,” said Todd Rosenbluth, CFRA’s head of ETF and Investment Fund Research. “Real estate is a sector that is well connected to reopening the US economy as Covid begins to recede.”
Many products in the category that invest heavily in real estate funds outperform broadly based indices. Vanguard and BlackRock funds are each up about 20% this year, compared to 13.6% for the S&P 500.
Mohit Bajaj, director of ETFs at WallachBeth Capital, said some of the inflows came from hunting for yield amid lows.
“It seems like the Fed is going to raise rates, but not anytime soon, so real estate and housing companies should bode well in a lower interest rate environment,” he said.
Issuers are pushing for new products in order to benefit from the boom. Janus Henderson Group launched the actively managed US real estate ETF earlier this week, and American Century recently filed for an Avantis real estate ETF, ticker AVRE.
“They had lower returns, better earnings and higher inflation in the second quarter,” said John Augustine, chief investment officer of Huntington National Bank. “It’s a kind of trifecta for real estate.”