Alternative Investments/Real Estate: Columbia Threadneedle Debuts ETF Focused On REITs
The new ETF from Columbia Threadneedle, which is described as a “strategic beta real estate ETF designed for asset allocators, based on the firm’s proprietary research,” is focused on REITS.
Columbia Threadneedle Investments has launched the Columbia Research Enhanced Real Estate ETF (NYSEARCA: CRED), expanding its exchange-traded fund (ETF) offering. The fund tracks a custom, proprietary index that is designed to outperform the FTSE Nareit All Equity REITs Index by selecting securities based on research and modifying market cap weighting to emphasise income and geographic opportunity.
The ETF will track the firm’s proprietary Beta Advantage® Lionstone Research Enhanced REIT Index. This index usually encompasses 70-90 REITs, with a focus on eight sectors, namely Specialized, Industrial, Diversified, Hotel & Resort, Residential, Retail, Office, and Health Care REITs, with varying weights.
The weighting approach is in response to a recent survey by Columbia Threadneedle that found income diversification and generation were among the top reasons why financial advisors allocated to real estate.
Furthermore, 90% of financial advisors take into account the geographic exposure of underlying assets when investing in Real Estate Investment Trust strategies, the study found.
The ETF, which has an expense ratio of 33 basis points, is managed by portfolio managers Christopher Lo and Henry Hom. The objective is for the fund to function as a core allocation to the US real estate sector within investment portfolios.
It is the 12th ETF launched by Columbia Threadneedle, which has more than $608 billion in assets under management.
The new fund represents the first collaboration between Columbia Threadneedle Investments and its institutional real estate investment subsidiary, Lionstone Investments.
Related Story: Dimensional Launches Global Real Estate ETF
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