Seasoned investors know that the real estate sector is wide and includes a wide variety of property types. They also know that real estate investment funds (REITs) in one industry do not necessarily work in sync with peers in other groups.
While broad index funds and ETFs often do their part when it comes to diversifying real estate transactions, investors can find more tempting opportunities with tactics. On this front, an important ETF idea to consider is Pacer Benchmark Industrial Real Estate SCTR ETF (NYSEArca: INDS)…
As the name suggests, INDS is an ETF targeted at industrial REITs or warehouse landlords. This may seem like a boring corner of the REIT universe. However, warehouse REITs, thanks to strong demand from online retailers, are almost as popular as the residential real estate market.
“Competition drives up industrial rents as retailers and logistics providers seek to move goods closer to communities, and some are fighting wars over the most desirable properties. Companies are looking to deliver online orders faster to digital shoppers’ homes and are responding to rising consumer spending that helps stimulate economic recovery, ” reports Jennifer Smith for the Wall Street Journal…
Proof in INDS Pudding
Net performance confirms the validity of zeroing a specific REIT segment. Over the past year, INDS is up 35.60%, up 640 basis points above the MSCI US Investable Market Real Estate 25/50 diversified index.
INDS, which turned three last month and tracks the benchmark industrial property SCTR index, is also an important factor in today’s inflationary environment. As has been widely noted, REITs have long been a robust inflation-fighting asset class. Much of this status is due to price power – a concept that industrial REITs are currently taking to the next level.
“Industrial rents in the first five months of 2021 are up 9.7% over the same period last year, and asking for industrial rents are up 7.1%, according to CBRE, which tracks 58 US markets,” the magazine said. …
Added to the long-term case for INDS is the supply and demand dynamics of the industrialized REIT world. Online retail sales are skyrocketing, which means the world’s Amazons and Walmart need more nodes from which to ship goods to consumers.
However, in today’s environment, the amount of viable land available for building warehouses is dwindling, which means that INDS could further increase price power through scarcity.
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The opinions and predictions expressed here are those of Tom Lydon and may not come true. The information on this site should not be used or construed as an offer to sell, an offer to buy, or a recommendation for any product.