Alternative Investments/Real Estate: New Active, REIT-Based ETF From SS&C ALPS

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The new ETF will invest in securities of U.S. real estate investment trusts.

SS&C ALPS Advisors have launched an actively managed, semi-transparent ETF that focuses on the U.S. REIT securities market. The ALPS Active REIT ETF (REIT) will trade on the NASDAQ.

The ETF has an expense ratio of 0.68%. (ETF.com)

The ALPS Active REIT ETF (REIT) and secrecy on portfolio

“The strategy is the first retail offering of an institutional separate account strategy that GSI Capital has run for the last 15 years,” said SS&C ALPS Advisors President Laton Spahr to ETF Strategy.

“It’s a fairly concentrated REIT strategy—they now have a third or more of their portfolio in the top five names. Obviously when you’re running that level of concentration and that level of active share, showing it to the market when you change the position is giving away a lot of intellectual property,” he said. The ETF relies on Blue Tractor’s model for semi-transparent ETFs.

The ALPS Active REIT ETF (REIT) is the second active U.S. REIT ETF to be offered to investors in the country. The other is the $94 million Invesco Active U.S. Real Estate ETF (PSR),  which has an expense ratio of 0.35% and discloses its holdings daily.

The fund will be sub-advised by GSI Capital Advisors, which is well-experienced in managing real estate investments.

ALPS Active REIT ETF: Advantages for investors

According to Spahr:

  • Over the past 25 years, the REIT space has outperformed the S&P 500 Index by an average of 150 basis points per year
  • REITs behave like equities but earn yield like bonds
  • Returns on REITS grow faster than inflation
  • Regarding risk, REIT is in-between investment-grade bonds and S&P 500 stocks

REIT Outlook for 2021

According to the 2021 Global REIT Outlook by Hazelview Investments Inc., consensus estimates call for global GDP growth of 4.9% in 2021. This represents the highest growth rate since 2010, a year when global REITs outperformed global equities by approximately 800 basis points.

“A suite of vaccines will catalyze the return to normalcy and 2021 will mark the beginning of the great ‘REIT-opening’, where there will begin to be a convergence of fundamentals and performance between the ‘have’ and ‘have not’ sectors within the commercial real estate industry,” notes Hazelview.

“Since REITs are the landlords of the global economy, an improvement in GDP should bode well for REIT cash flow growth over the next 12 months.”

Related Story:  Real Assets Investing Through REITs

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