FlexShares, the ETF brand from Northern Trust, has been rapidly
expanding its lineup as of late, putting out several new funds.
This trend continues into November with the latest addition from
the firm with the
FlexShares Global Quality Real Estate Index Fund-
This brand new product is the first such real estate fund for
FlexShares, though it is by no means their first product with a
global focus for the company. In fact, several of FlexShares' other
funds-such as its
natural resources fund (
broad infrastructure index fund (
-have broad exposure to global markets, so GQRE is definitely
continuing with this trend, and appears to be a natural fit for
FlexShares and their lineup.
GQRE in Focus
The product is an interesting addition to the broad real estate ETF
world, and it looks to be a little different than some of the
others currently on the market. In particular, this fund looks to
have a focus on 'quality' real estate companies and it seeks to
avoid 'value traps' with this approach (see
all the Real Estate ETFs here
This is done by looking at real estate firms that have significant
strength in profitability, management expertise, and cash flow.
Additionally, value and momentum factors are also taken into
account, while industry, country, and region factors are also
weighed too. In terms of costs, the product will charge investors
45 basis points a year in fees, in line with many others in the
global real estate space.
In terms of the portfolio,
Public Storage (
Boston Properties (
take the top three spots, accounting for roughly 12.9% of assets.
This does mean that the portfolio has a decent level of assets in
U.S. securities-roughly 46%-- though companies from Japan (12.6%),
Hong Kong (12.4%), and the UK (7.8%), round out the rest of the top
four from a nation perspective.
The product does have a bit of a large cap focus (43%) of assets,
though mid and small caps both make up at least 26% of assets too.
And from an industry perspective, real estate development and
operations (37.6%), commercial REITs (36.2%), and specialized REITs
(17%) account for the vast majority of the fund (see
Top ETFs for the Real Estate Recovery
"Research shows that a high-quality, value-focused portfolio of
real estate securities may offer attractive returns with less
volatility compared to traditional capitalization-weighted global
real estate indices,"
said Shundrawn Thomas
, head of Northern Trust's FlexShares Exchange Traded Funds Group
in a press release. "GQRE provides investors a disciplined approach
for investing in global real estate equities."
How does it fit in a portfolio?
The fund could be an interesting pick for investors seeking a
decent yield, and a high level of safety thanks to the focus on
quality. This focus may help the product to outperform its peers
should we face some turbulence in the broad real estate market.
However, investors who are looking for heavy international exposure
might be a little disappointed with this product, as close to half
the portfolio is in U.S. securities. Additionally, it isn't the
cheapest choice by any stretch, as there are others in the space
that have far lower expense ratios, though it is cheaper than
others in the global category (see
The Introductory Guide to Real Estate ETF Investing
ETF Competition and Bottom Line
Top products in the real estate space that have a global focus
Cohen & Steers Global Realty Majors ETF (
SPDR DJ Wilshire Global Real Estate ETF (
. The SPDR product has over $100 million in assets, while RWO has
cracked the $1 billion level, suggesting that investors have
embraced these products so far.
However, both do have expense ratios that are elevated compared to
the new FlexShares fund, while neither has a focus on 'quality'
like GQRE. Thanks to this differentiation, the FlexShares product
may be able to attract a decent level of assets, though some
outperformance compared to its more established peers-and a solid
yield-will definitely be necessary for this to happen.
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BOSTON PPTYS (BXP): Free Stock Analysis Report
FLEXS-GL QREI (GQRE): ETF Research Reports
COHEN&ST GL RLT (GRI): ETF Research Reports
PUBLIC STORAGE (PSA): Free Stock Analysis
SPDR-DJ W GL RE (RWO): ETF Research Reports
WEYERHAEUSER CO (WY): Free Stock Analysis
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