Recent survey data from Columbia Threadneedle Investments shows that 93% of financial advisors plan to maintain or increase their real estate allocations over the next 12 to 24 months, confirming that the “timing is right” for the launch of the Columbia Research Enhanced Real Estate ETF (NYSE Arca: CRED), says Marc Zeitoun, head of strategic beta at the global asset manager.
Columbia Threadneedle launched CRED on April 26. The ETF tracks a custom, proprietary index which typically tracks 70-90 REITs weighted across eight sectors. It is designed to outperform the FTSE Nareit All Equity REITs Index through research-driven security selection and modified market cap weighting that emphasizes income and geographic opportunity.
Speaking on the REIT Report, Zeitoun noted that the firm’s survey data also showed that 82% of financial advisors favored the REIT structure as a way to express their preferences in real estate. “So, we think that timing is right, and we know for sure that the packaging is right relative to the way that advisors and allocators build their client portfolios.”
Chris Lo, portfolio manager at Columbia Threadneedle, pointed out that “geographic exposure is actually very important to investors as well…not only are we looking at REITs, we’re looking at the geographic preferences of where we’re investing.” Zeitoun added, “we filter for quality and wait for opportunity.”
Turning to the current volatility in the markets and the timing of the ETF launch, Zeitoun acknowledged that “there is no such thing as perfect timing.” However, “we feel that much of the bad news has been priced into most of these REITs and that we are about to begin an upward cycle.”
Meanwhile, CRED launched with an expense ratio of 33 basis points, “which we think is perfect pricing for embedded expertise. And it is an ETF, which means that people can use the solution to be tactical,” Zeitoun added.