A new ETF is making big bets on real estate and other hard assets.
CBRE Investment Management launched the IQ CBRE Real Assets ETF in May with the idea of providing inflation protection in a rising interest rate environment.
“The ETF market is lacking options in this space,” ETF portfolio manager Dan Foley told CNBC’s “ETF Edge” on Thursday. Lots of opportunities.”
Foley noted that global financial institutions are already entering the space, and said he believes retail investors should too.
“It’s one of the most attractive areas in the real asset space,” Foley said. “Valuations are compelling. … The ingredients for a fairly strong future total return are in place.”
CBRE’s new ETF is set to hit the market as excitement over artificial intelligence companies and technology dominates Wall Street.
Foley sees hard assets as a big diversion away from technology in general, and hot artificial intelligence stocks in particular. Additionally, he pointed out that hard assets are essential to enable a digital economy.
“Data centres, cell towers, getting decarbonized — you need these leading infrastructure companies to invest. We think it’s driving growth, leading to differentiated results,” he said.
According to issuer New York Life Investments, the fund’s major holdings are real estate and utilities.they include public storage, crown castle, Nestra Energy and Equinix (EQIX), considered a leader in data centers.
Equinix stock has risen 7% over the past month.
“Equinix is a great example of a world-leading entity,” said Foley. “That’s the assets you want. These are critical to the new economy.”
Since its launch on May 10, the IQ CBRE Real Assets ETF has fallen nearly 6%.