This Active ETF Has Flexibility in a Changing Real Estate Market

When ETF investors want real estate exposure, they’re not relegated to just the residential market. That’s imperative in the current market environment. The ALPS Active REIT ETF (REIT) provides this flexibility.

With mortgage rates relatively high, the residential real estate market is languishing. The commercial side is still feeling the effects of the work-from-home dynamic caused by the pandemic. That said, it doesn’t mean opportunities don’t exist in real estate or more specifically, real estate investment trusts.

One of the attractive features of REITs is their fixed income opportunities. REIT has a 30-day SEC yield of 3.61% (as of January 31). And this ETF can help supplement monthly income while getting potential price appreciation from the real estate market.

REIT comprises common equity securities of U.S. REITs as well as the common equity of U.S. real estate operating companies that are not structured as REITs, preferred equity of U.S. REITs, and real estate operating companies. The active strategy component lets experienced portfolio managers handpick the fund’s holdings. This maintains necessary flexibility in the current market.

Locating Niche Markets

As mentioned, the residential and commercial markets are posing challenges to real estate investors. REIT focuses on niche corners of the market, such as its holdings in Simon Property Group, which focuses on shopping malls, outlet centers, and community/lifestyle centers. Getting creative in the real estate market is almost imperative and REIT’s portfolio managers can deftly locate those opportunities.

Simon Property Group comprises REIT’s largest holding. Given its fourth-quarter performance, it’s easy to see why.