Columbia Threadneedle launches smart beta real estate ETF

May 9th, 2023 | By | Category: Alternatives / Multi-Asset

Columbia Threadneedle Investments has launched a new ETF that adopts an alternatively weighted approach to the US real estate investment trust (REIT) market.

Marc Zeitoun, Head of Strategic Beta at Columbia Threadneedle Investments

Marc Zeitoun, Head of Strategic Beta at Columbia Threadneedle Investments.

The Columbia Research Enhanced Real Estate ETF (CRED US) has been listed on NYSE Arca with an expense ratio of 0.33%.

Marc Zeitoun, Head of Strategic Beta at Columbia Threadneedle Investments, said: “Real estate has long played an important role in portfolio diversification, and there are many ways to access the asset class across the liquidity spectrum.

“With the launch of CRED, we are offering investors and allocators a differentiated, research-driven way to improve their benchmark exposures to real estate.”

Methodology

The fund is linked to the Beta Advantage Lionstone Research Enhanced REIT Index which employs a smart beta methodology in a bid to outperform the traditional FTSE Nareit All Equity REITs Index, a broad universe of US-listed REITs across multiple property sectors.

The REITs in the universe are assessed on factors such as liquidity, income, geographic exposure, quality, value, and catalyst based on proprietary analysis conducted by Columbia Threadneedle’s institutional real estate investment subsidiary, Lionstone Investments.

The index selects approximately 70 to 90 REITs and weights them so as to enhance income while diversifying across geographic exposures and eight main REIT sectors – Specialized, Industrial, Diversified, Hotel & Resort, Residential, Retail, Office, and Health Care.

The ETF is managed by Christopher Lo and Henry Hom, portfolio managers in Columbia Threadneedle’s Managed and Indexed Portfolio Solutions team. According to the pair, CRED may be deployed as a core allocation to US real estate, helping to enhance a portfolio’s diversification and income generation while also opening up the possibility for alpha. Distributions are made to investors on a quarterly basis.

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