Real estate cycles tend to move slowly and to be long running. Understanding these trends and investing in the companies and sectors that are expected to benefit can be a productive investment strategy. That’s the idea behind the IQ CBRE NextGen Real Estate ETF (ROOF), previously the IQ U.S. Real Estate Small Cap ETF.
The fund, which will have a new name as of September 1st, will also have a new underlying index that was created in conjunction with CBRE Investment Management, a global leader in real estate investing. It focuses on property sectors IndexIQ and CBRE believe are aligned with three major trends reshaping the economy: Digital Transformation, eCommerce Revolution, and Generational Change.
Digital Transformation as it applies to real estate generally refers to companies that own, operate, and develop technology-related assets including cell phone towers, fiber networks, and data and digital communications centers. The “eCommerce Revolution” theme is built around companies that own, operate, and develop facilities where products ordered online are stored and shipped to the end user. Growth in demand for these “industrial” properties has been accelerated by pandemic and the concomitant explosion in Internet-driven sales, a trend we think is likely to continue.
Finally, Generational Change. Demographics play a large part in this piece of the strategy, where investments are focused on properties that include life sciences, skilled nursing facilities, senior living, multi-family residential, single-family-for-rent, and student housing. These are sectors expected to experience secular growth over the coming years based on trends like an aging population and the rising cost of buying a home.
Partnering with CBRE Investment Management brings us a new set of eyes as well as significant fundamental and quantitative research expertise to the identification of trends to the selection of sectors most likely to be impacted by these trends. Its parent company, CBRE, is one of the world’s largest providers of commercial real estate services. We think this provides a great perspective from which to analyze future trends in the market.
One more thing about the NextGen fund: the management fee is falling, too, from 0.69% to 0.60%, also effective September 1. The fund will continue to trade under the ticker “ROOF.”
Past performance is no guarantee of future results, which will vary. All investments are subject to market risk and will fluctuate in value.
Before considering an investment in the Fund, you should understand that you could lose money.
As the Fund’s investments are concentrated in the real estate sector, it is exposed to concentration risk, interest rate risk, leverage risk, property risk and management risk. The Fund is concentrated in small capitalization companies, whose stock prices generally are more volatile than those of larger companies. The Fund is non-diversified and is susceptible to greater losses if a single portfolio investment declines than would a diversified fund. The Fund is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund's Shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk and the Fund does not represent a complete investment program.
Click on the fund name for the most current fund page, which includes, the prospectus, investment objectives, performance, risk, and other important information. Returns represent past performance which is no guarantee of future results. Current performance may be lower or higher. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Visit nylinvestments.com/etfs and nylinvestments.com/funds and for the most recent month-end performance.
This material represents an assessment of the market environment as at a specific date; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular.
The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.
This material contains general information only and does not take into account an individual's financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision.
CBRE Investment Management is unaffiliated with “New York Life Investments”.
“New York Life Investments” is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company. IndexIQ® is an indirect wholly owned subsidiary of New York Life Investment Management Holdings LLC and serves as the advisor to the IndexIQ ETFs. ALPS Distributors, Inc. (ALPS) is the principal underwriter of the ETFs. NYLIFE Distributors LLC is a distributor of the ETFs. NYLIFE Distributors LLC is located at 30 Hudson Street, Jersey City, NJ 07302. ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC. NYLIFE Distributors LLC is a Member FINRA/SIPC.
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