Pacer introduces suite of real estate sector ETFs

May 18th, 2018 | By | Category: Alternatives / Multi-Asset

Pacer ETFs has launched a suite of three new funds on NYSE Arca that provide access to real estate investment trusts (REITs) targeting different sectors of the US property market.

Retail Real Estate ETFs

The suite of ETFs target traditional bricks-and-mortar retail REITs as well as REITs standing to gain from the ongoing e-commerce revolution.

REITs are not directly correlated to traditional equity markets and may offer diversification and the ability to reduce volatility of a traditional stock/bond portfolio.

REIT ETFs have also grown in popularity as a suitable solution for income-seeking investors due to their high dividend yields; by law US-based REITs are required to maintain dividend pay-out ratios in excess of 90%.

The Pacer Benchmark Retail Real Estate SCTRSM ETF (RTL US) tracks a portfolio of commercial retail REITs which invest in shopping centres, shopping malls and similar structures. The reference index is the Benchmark Retail Real Estate SCTR Index which targets REITs that invest in assets located in prime locations with quality tenants throughout the country. The fund has a dividend yield of 5.4%.

While RTL focuses on a well-established opportunity set within the property universe, some investors may be concerned about the long-term viability of the strategy due to the growth of online shopping. This is where Pacer’s next two ETFs come into play. The funds target emerging segments of opportunity within the broader real estate category that stand to benefit from developments in the e-commerce revolution.

“I believe we’re only on the cusp of what experiential retail can become,” said Benchmark CEO and managing partner Kevin R. Kelly. “As the old department store model disappears, we’re witnessing a disruption and rapid technological evolution that’s ushering in an exciting new age of reinvented retail.”

“Our new suite of ETFs will provide investors with an opportunity to invest in the segments of the real estate market that have benefitted since e-commerce has transformed our lives.”
-Sean O’Hara, president of Pacer ETFs Distributors

Sean O’Hara, president of Pacer ETFs Distributors, added, “The world has rapidly changed because of e-commerce. Our new suite of ETFs will provide investors with an opportunity to invest in the segments of the real estate market that have benefitted since e-commerce has transformed our lives.”

The Pacer Benchmark Industrial Real Estate SCTRSM ETF (INDS US) invests in industrial REITs by tracking the Benchmark Industrial Real Estate SCTRSM Index. These REITs target opportunities in warehouses, distribution centres and similar facilities that allow for e-commerce companies to ship goods to their final destinations, sometimes within hours. This ETF includes REITs that specialize in the logistics required to make e-commerce work. The fund has a dividend yield of 3.7%.

The Pacer Benchmark Data & Infrastructure Real Estate SCTRSM ETF (SRVR US) invests in data and infrastructure REITs by tracking the Benchmark Data & Infrastructure Real Estate SCTRSM Index. These REITs target opportunities in cell towers and data processing centres that store the information and handle the orders that start the e-commerce process. The fund has a dividend yield of 3.5%.

The indices underlying the ETFs are reconstituted annually and rebalanced quarterly. Each fund has an expense ratio of 0.60%.

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