Fundamentals of Public REITs Are Strong While Prices Are Low
November 14, 2022 | Elle Caruso | ETF Trends
REITs have been the top-performing asset class in eight of the past 22 years and are currently trading at substantial discounts, presenting a compelling investment opportunity for advisors.
In the November 14 webcast, REITs: Property at a Discount, Craig Leupold, CEO at GSI Capital Advisors, Nick Tannura, CIO at GSI Capital Advisors, Eric Hewitt, CIO at SS&C ALPS Advisors, and Tom Lydon, vice chairman of VettaFi, discussed the differences between public and private market pricing of real estate assets and the fundamentals of the sector.
The ALPS Active REIT ETF (REIT), launched by SS&C ALPS Advisors in February 2021, is sub-advised by GSI Capital Advisors. Active management has proven to be very successful in the real estate sector as managers have the opportunity to capitalize on dislocations in the REITs market, Hewitt said during the webcast.
“In the last three years, 83% of active managers have outperformed their passive benchmark, and that number really doesn’t go down much over time – on five-year and 10-year bases,” Hewitt said.
There are several reasons to consider adding exposure to public REITs to a portfolio, particularly now while high inflation and challenges in equity markets are likely to persist.
REITs notably have very low correlations to other asset classes, but very high correlations to private market real estate. Leupold said they see real estate and REITs as a hybrid or a proxy between bonds and equities in that they offer a good initial yield, but at the same time, offer the growth characteristics that come from owning real estate.
