U.S. real estate appears to be on a constant boom, and as it grows rapidly, ETF investors may be looking elsewhere in the world with funds like FlexShares Global Quality Real Estate Index Fund (GQRE)…
Per Bloomberg report, “President of Blackstone Group Inc. John Gray There are some tips for investors looking to make sense of the insane real estate market in the US: Don’t be afraid of a collapse anytime soon. “
“Home prices have risen the most since 2005, cheap mortgages are encouraging buyers to buy new homes, and construction costs are rising due to rising raw material prices,” the report said. “At the same time, the shortage of workers means that new construction is not keeping up with the growing demand. And in commercial real estate, more widespread teleworking during the Covid-19 pandemic threatens to destroy office real estate. ”
According to the fund’s description, GQRE looks for investment results that broadly match the price and yield (excluding fees and costs) of the Northern Trust Global Quality Real Estate Index. The index is intended to reflect the performance of a number of companies that collectively are more influenced by quality, value and dynamics than the Northern Trust Global Real Estate Index.
“Investing in the real estate sector offers the potential for increased growth, diversification, income, along with potential protection against the risk of long-term inflation for the portfolio.” FlexShares Fund Focus the article says. “We believe that a well-diversified and global approach to real estate investment is key to unlocking the full range of these potential benefits.”
Real estate as a defense against inflation
As capital markets anticipate rates to rise, real estate could provide an ideal hedge against inflation. Compared to bonds, real estate dividend yields have historically been able to provide a higher rate of return.
“Our research shows that real estate stocks have traditionally been used as a potential hedge against long-term inflation, as certain types of real estate stocks have been shown to be less resilient to higher interest rates,” FlexShares said. “Historically, we believe that real estate investments also generate higher dividends than other stock classes, offering an alternative source of potential income.”
“Finally, we believe that real estate has historically had a low correlation with both fixed income and other equity asset classes,” added FlexShares. “As a result, real estate can add additional diversification to an already well-diversified portfolio.”
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