New ETF Brings Needed Refresh to Real Estate Investing

Beth McCandry

As an independent sector, the real estate sector is only a few years old and is one of the smaller sector weights in the S&P 500. However, equity real estate investments have served investors well for decades.

Real estate stocks and, in particular, real estate investment trusts (REITs) often deliver above-average dividend yields, which among other things make them solid alternatives to bonds and offer impressive anti-inflationary potential.

Nevertheless, the sector and the related investments need to be refreshed and modernized. The freshly minted Goldman Sachs Future Real Estate and Infrastructure Equity ETF (GREI) delivers these updates. GREI debuted earlier this month as part of a trio of Goldman Sachs exchange-traded funds exploring innovative investment concepts. The other two are the Goldman Sachs Future Health Care Equity ETF (GDOC) and the Goldman Sachs Future Consumer Equity ETF (GBUY).

GREI helps investors “gain exposure to the unique characteristics of real estate and infrastructure – attractive returns, strong growth potential, low correlation with traditional asset classes, and inflation hedge benefits while focusing on assets we believe they will be in are on the right side of disruption. “According to Goldman Sachs Asset Management (GSAM).

Goldman Sachs’ Fundamental Equity Team is building the GREI lineup, which currently has 46 members. GREI is a move away from old-guard real estate ETFs as the rookie fund offers exposure to newer, emerging real estate concepts like 5G, data centers, and grid security.

The new ETF focuses on several themes including demographic change, experience with things, environmental sustainability, innovation and social sustainability.

“The key issues and related investment areas may change over time at the sole discretion of the investment advisor without prior notice to shareholders,” states the GREI prospectus. “In addition, the Fund is permitted to make investments that are not aligned with the key themes. In selecting investments, the Investment Adviser will not seek to attribute any particular portion of the Fund’s portfolio to any particular key theme, and the allocation of the Fund’s investments to the key themes will vary over time at the sole discretion of the Investment Advisor. The fund cannot always allocate its investments to each key theme and an investment can be geared towards several key themes at the same time. “

GREI reduces that legal jargon and offers more flexibility and versatility than a traditional real estate ETF. For this reason, GREI is not a specialty real estate ETF. In addition to a weighting of 57.5% in this sector, the fund has a combined 36.6% in the utilities and industrial sectors.

Further news, information and strategies can be found in the Future ETFs Channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon and cannot actually occur. The information on this website should not be used or construed as an offer to sell, solicitation to buy, or recommendation of any product.