Global Courant
A new ETF is betting heavily on real estate and other hard assets.
CBRE asset management launched the IQ CBRE Real Assets ETF in May on the belief that it would provide inflation protection in a rising interest rate environment.
“The ETF market lacks options in this area,” Dan Foley, the ETF’s portfolio manager, told CNBC’s “ETF Edge” on Thursday. “There are a lot of opportunities here with secular changes in things like digital transformation, decarbonization and, frankly, mispricing in the market.”
Foley pointed out that global financial institutions are already in the space and said he thinks retail investors should be too.
“This has been one of the most attractively positioned segments of the real asset universe,” Foley said. “Valuations are very compelling. … (The) elements are in place for quite strong total returns going forward.”
CBRE’s new ETF hits the market as excitement over artificial intelligence and technology companies dominates Wall Street.
Foley argued that in general, hard assets are an important diversification away from technology, especially popular AI stocks. Moreover, he noted that hard assets are crucial to enable a digital economy in the first place.
“Data centers, cell towers, decarbonisation — you need these leading infrastructure companies to make that investment. It’s driving growth that we think will deliver a differentiated outcome,” he said.
According to publisher New York Life Investments, the fund’s largest holdings are in real estate and utilities. They contain Public storage, crown castle, Nextera energy And equinix (EQIX), which is considered a leader in data centers.
Equinix shares are up 7% over the past month.
“Equinix is a great example of a world-leading entity,” said Foley. “That’s the kind of asset you want. These are essential to the new economy.”
Since the IQ CBRE Real Assets ETF launched on May 10, it is down almost 6%.
New hard asset ETF places big bet on real estate
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