NextGen Real Estate

Real estate cycles tend to move slowly and to be long running. Understanding these trends and investing in the companies and sectors that are expected to benefit can be a productive investment strategy. That’s the idea behind the IQ CBRE NextGen Real Estate ETF (ROOF), previously the IQ U.S. Real Estate Small Cap ETF.  

The fund, which will have a new name as of September 1st, will also have a new underlying index that was created in conjunction with CBRE Investment Management, a global leader in real estate investing. It focuses on property sectors IndexIQ and CBRE believe are aligned with three major trends reshaping the economy: Digital Transformation, eCommerce Revolution, and Generational Change.

Digital Transformation as it applies to real estate generally refers to companies that own, operate, and develop technology-related assets including cell phone towers, fiber networks, and data and digital communications centers. The “eCommerce Revolution” theme is built around companies that own, operate, and develop facilities where products ordered online are stored and shipped to the end user. Growth in demand for these “industrial” properties has been accelerated by pandemic and the concomitant explosion in Internet-driven sales, a trend we think is likely to continue.

Finally, Generational Change. Demographics play a large part in this piece of the strategy, where investments are focused on properties that include life sciences, skilled nursing facilities, senior living, multi-family residential, single-family-for-rent, and student housing. These are sectors expected to experience secular growth over the coming years based on trends like an aging population and the rising cost of buying a home.

Partnering with CBRE Investment Management brings us a new set of eyes as well as significant fundamental and quantitative research expertise to the identification of trends to the selection of sectors most likely to be impacted by these trends. Its parent company, CBRE, is one of the world’s largest providers of commercial real estate services. We think this provides a great perspective from which to analyze future trends in the market.

One more thing about the NextGen fund: the management fee is falling, too, from 0.69% to 0.60%, also effective September 1. The fund will continue to trade under the ticker “ROOF.”

Related: Millionaire Real Estate Ownership