Despite low interest rates, a scenario that historically favors the group, real estate stocks and exchange-traded funds are struggling this year.
What Happened: Struggles hastened by the demise of brick-and-mortar stores and the work from home theme punishing commercial office space firms are among the factors weighing on old school real estate ETFs.
In other words, the time could be right for new approaches to the sector. Enter the Cambria Global Real Estate ETF BLDG. The new global ETF is an actively managed fund that adheres to a quantitative, rules-based methodology.
Why It's Important: BLDG “seeks income and capital appreciation by investing primarily in the securities of domestic and foreign companies principally engaged in the real estate sector and real-estate related industries that exhibit favorable multi-factor metrics, such as value, quality and momentum,” according to Cambria.
None of BLDG's holdings exceed weights of 1.40%, so single stock risk is limited in the rookie fund and risk is diverse across real estate sub-industry groups. The advantage of BLDG being actively managed is that Cambria's managers are constrained by an index and they can move into strong real estate groups while trimming exposure to laggards.
“We view real estate as a core piece of the investment opportunity set, and BLDG offers investors global active exposure to real estate through a thoughtful, multi-factor approach focused on value, quality, and momentum. BLDG fits nicely with our firm’s mission of engineering ETFs that focus on absolute returns with low correlation to traditional assets,” said Cambria co-founder Meb Faber.
What's Next: BLDG could prove to be a well-timed launched, something many new ETFs struggle to attain, for a simple reason. Cyclical stocks are starting to come back and that's relevant for BLDG because real estate is considered a cyclical sector.
BLDG, the 12th ETF in the Cambria lineup, charges 0.59% per year, or $59 on a $10,000 investment.
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