Principal Global Investors has announced the launch of the Principal Real Estate Active Opportunities ETF (Ticker: BYRE).
The firm’s first semi-transparent ETF is available for trading on the New York Stock Exchange. It is a new, actively managed, semi-transparent ETF that has a focused concentration on the non-traditional property sectors of the publicly traded US real estate market. The objective of the fund seeks total return.
“The Principal Real Estate Active Opportunities ETF combines two core strengths of Principal – active management and real estate investing – to provide clients with an innovative strategy that seeks to improve portfolio outcomes. The fund is thematic and one of the first semi-transparent ETFs that gives investors exposure to in-demand real estate sectors with the benefits of a liquid ETF structure,” says Jill Brown, managing director of the US Wealth Platform, Principal Global Investors.
Due to its concentrated exposure to non-traditional property sectors, the Principal Real Estate Active Opportunities ETF can enhance core equity portfolios for investors as a satellite allocation, the firm writes, adding, that this creates the potential for better portfolio outcomes and higher total returns with improved diversification generated by the resilient growth characteristics of many public REITs in the non-traditional sectors.
Non-traditional real estate sectors, which include property types like data centres, life sciences, single-family rental, medical office, and self-storage, have been highly resilient the past few years. Shifts in the economy and structural themes ranging from demographics and infrastructure to globalization and technological innovation are driving change and opportunity for these non-traditional property types.
“Non-traditional sectors now represent 64 per cent of the public REIT market as they almost doubled their share of the market cap from 2010-2020. And compared to traditional real estate sectors, non-traditional REITs have offered higher returns and higher growth over the last 10 years,” says Todd Kellenberger, client portfolio manager for Principal Real Estate Investors. “This reinforces our conviction that our semi-transparent ETF that is focused on these niche property types can be a differentiated strategy for investors seeking resilient growth and potential inflation protection.”
The firm writes that as a top 10 global manager of real estate assets and a top five manager of public REITs, Principal is well positioned to deliver this new ETF in a growing part of the actively managed ETF market. The strategy will be managed by the firm’s dedicated real estate investment team using a bottom-up approach that will emphasise owning publicly traded U.S. real estate companies in non-traditional sectors that can benefit from structural drivers.