Alternative Investments/Real Estate: Horizons Launches Long And Short, Leveraged, Real Estate ETFs

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The ETFs offer leveraged bets on Canadian REITs, both long and short.

Horizons ETF Management Canada Inc launched last week the BetaPro Equal Weight Canadian REIT 2x Daily Bull ETF (TSE: HREU) and the BetaPro Equal Weight Canadian REIT -2x Daily Bear ETF (TSE: HRED), which offer two times (200%) the daily move on a REIT index, on the long and short sides respectively. (Financial Post)

The new ETFs will track the Solactive Equal Weight Canada REIT Index.

Investors can therefore opt for one or the other ETF depending on whether their view of Canadian real estate is bullish or bearish. Given that Canadian real estate has been on a bull run for more than a decade (see chart below), there just might be many takers for the latter.

BetaPro Equal Weight Canadian REIT 2x Daily Bull ETF (TSE: HREU) and the BetaPro Equal Weight Canadian REIT -2x Daily Bear ETF (TSE: HRED)

Both ETFs charge a 1.15% management fee.

According to Steve Hawkins, president and chief executive officer of Horizons ETFs, the fund manager noted rising interest from investors in real estate, particularly the REIT space, and in the context of Canada’s emergence from the pandemic.

“There’s been a lot of investor money coming into the space and that just creates more opportunity for individual investors who are trying to empower their own portfolios,” Hawkins told the Financial Post. “These products just give them more options.”

Horizons on real estate: double-edged sword?

According to Hawkins the ETFs offered investors a more efficient way to implement their real estate strategy at lower costs, without recourse to borrowings or physical assets.

“Now (businesses are) starting to re-open and come back online and a lot of those properties and these trusts ended up getting subsidies,” Hawkins said, however. “Those subsidies are starting to dry up now as well from a government funding and support perspective. So there’s, I would say, a double-edged sword.”

The Index covers 22 companies in the commercial real estate sectors focusing on residential apartment complexes, office, retail, and industrial real estate space. However, it has low exposure to single-family homes, one of the main beneficiaries of the bull run.

Related Story: Janus Henderson Launches Real Estate ETF

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