SSGA launches continental European real estate ETF

Aug 12th, 2015 | By | Category: Alternatives / Multi-Asset

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State Street Global Advisors, the asset manager behind the SPDR exchange-traded fund (ETF) range, has announced the launch of the SPDR FTSE EPRA Europe ex UK Real Estate UCITS ETF (ZPRP).

SSGA launch continental European property ETF

Alexis Marinof, head of SPDR ETFs EMEA.

The fund tracks the FTSE EPRA/NAREIT Developed Europe ex UK Index offering exposure to listed real estate companies and real estate investment trusts (REITs) in Europe but excluding the UK whose relevant activities are defined as the ownership, disposal and development of income-producing real estate.

In contrast to direct property investing, which can involve significant capital outlays, hefty acquisition costs and long tie-up periods, the ETF offers investors a liquid, diversified and low-cost means of accessing property. And the fund’s diverse regional and property exposures, coupled with an attractive dividend yield (the index currently yields 3.42%), position this fund as useful tool for looking to add a degree of real estate and an alternative source of income to their portfolios.

The fund currently offers exposure to France (34.5%), Germany (26.4%), Sweden (10.1%), Switzerland (8.3%) and Spain (4.9%). The fund is listed on the London Stock Exchange and Deutsche Borse’s Xetra platform. It has a total expense ratio of 0.3% per annum.

“With extensive quantitative easing still in place in Europe, many investors are turning to the steady income, potential for inflation protection, and diversification that an investment in real estate can offer,” commented Alexis Marinof, head of SPDR ETFs EMEA.

Sudir Raju, managing director, ETP Relationships at FTSE Russell, added: “As investors continue to diversify their exposure to high yielding asset classes, listed real estate remains an attractive source of income. The FTSE EPRA/NAREIT indexes are seen as the standard industry benchmarks and act as a clear proxy for the direct real estate market. We are delighted to license the FTSE EPRA/NAREIT Developed Europe ex UK Index to SSGA as the underlying benchmark for its new European ETF.”

The fund builds on SSGA’s existing real estate offering, which includes the SPDR Dow Jones Global Real Estate UCITS ETF.

For investors seeking a greater focus on income, the iShares European Property Yield UCITS ETF (IPRP) could be a more relevant option. Thus fund tracks the performance of the FTSE EPRA/NAREIT Developed Europe ex UK Dividend+ Index.

For broader European coverage including the large UK property market investors could consider the iShares Stoxx Europe 600 Real Estate UCITS ETF (EXI5), which tracks the STOXX Europe 600 Real Estate Index.

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