What’s the longest-standing investment in the world? Arguably real estate. Since the Middle Ages, real estate has successfully provided investors with a regular income and often protected their wealth. And yet, it is not just about the money. When you invest in real estate, you also invest in people's homes, workplaces, and world-class infrastructure. The Real Estate ETF by VanEck provides you with this opportunity. Lower rate conditions could signal a turning point for real estate companies reliant on debt financing
Risks of a Real Estate ETF: You may lose money up to the total loss of your investment due to Equity Market Risk and Industry Concentration Risk as described in the Main Risk Factors, KID and prospectus.
Today, real estate has become the foundation of many investment portfolios. The global population continues to grow and the economy is demanding new workplaces, both acting as drivers for the real estate sector. Take the past 20 years: investors holding real estate equities have received higher returns than the broader stock market (see chart below), while spreading their portfolio risks.
Listed real estate has delivered higher returns than the global equity market
Past performance is not a reliable indicator of future performance. Source: VanEck. Global equities are represented by the MSCI World Gross Return Index. Listed Real Estate by the GPR 250 Gross Return Index. Data starting at 1 January 2000.
Real estate investments are a way to diversify a portfolio by providing exposure to an asset class different from stocks and bonds. Real estate has a low correlation with other traditional assets, meaning that its performance does not move in tandem with other assets. This can help to reduce overall portfolio volatility and increase stability, as well as potentially provide a source of stable income through rent. Professional investors also actively use real estate investments for this purpose. Additionally, real estate has the potential for long-term appreciation, which can help drive portfolio growth. It's important to keep in mind that, like any investment, real estate comes with its own set of risks and requires careful consideration before making an investment.
Example: Norwegian Pension Fund holdings (2022)
The growing population can be one of the leading factors impacting the real estate market. In 1950, the global population was approaching 2.5bn people. By 2023 it has more than tripled and reached 8bn people just 12 years after crossing the 7bn milestone. The UN estimates that this rapid growth is not going to stop any time soon and we will have 10bn people on our planet by 2060. Population growth will drive the demand for new offices, infrastructure, shopping malls and hotels.
Even the real estate sector is challenged by work from home, the online shopping boom, and the technological advantages of our society. Still, real estate companies have proven to be more resilient than one might think. Companies are actively changing their holdings to answer current demands, for example, by converting excessive office or retail space into modern housing. Real estate may be seen by politicians and the government as the cornerstone of our society, therefore, it is not uncommon to see a push for the redesign of existing premises instead of leaving them empty.
Not everyone can afford to buy buildings and benefit from their attractive returns. However, buying listed real estate through the VanEck Global Real Estate ETF brings listed real estate closer to all investors. It transforms real estate investing in the following ways:
When building our ETFs, we’re committed to quality and reducing risks. In summary, the Fund offers the following advantages:
The VanEck Global Real Estate UCITS ETF is diversified across 100 real estate companies from six real estate sectors.
Residentials include apartment buildings, flats, houses, student housing, manufactured homes, and single-family homes.
Vonovia, one of the holdings of the Real Estate ETF2, is one of the leading housing providers on the German market with a focus on social perspective. The company offers services and housing to roughly one million residents. Vonovia constructs new buildings and strives to shape neighborhoods to enhance the quality of life.
Source: VONOVIA SE
2Part of the portfolio as of 31/03/2023
This includes office buildings, skyscrapers, and office parks in central business districts or suburban areas.
Boston Properties3 is one of the largest publicly traded REITs in the United States that invests in premier workspaces. The core of its portfolio consists of properties in Boston, Los Angeles, New York City and other key cities in the US.
The Prudential Center in Boston, US.
Source: Boston Properties
3Part of the portfolio as of 31/03/2023
Industrials include factories, industrial facilities, warehouses, and distribution centers.
Prologis4 is a Real Estate Investment Trust that provides solutions in logistics. It invests in the largest distribution centers and warehouses located close to massive urban areas with strong demand and where land is scarce. With its portfolio spread across the globe, Prologis is one of the largest real estate companies in the world.
Prologis Park Ichikawa 2 in Japan
Source: Prologis
4Part of the portfolio as of 31/03/2023
Includes hotels, resorts, and other leisure properties.
In addition to owning Caesars Palace Las Vegas, MGM Grand, and Venetian Resort Las Vegas, one of the most iconic entertainment facilities on the Las Vegas Strip, VICI Properties Inc.5 is an experiential real estate investment trust. It owns the largest portfolio of gaming, hospitality and entertainment properties in the state. With 49 gaming facilities across the country comprising 124 million square feet, VICI Properties offers approximately 59,300 hotel rooms as well as more than 450 eateries, bars, nightclubs, and sportsbooks.
Source: VICI Properties.
5 Part of the portfolio as of 31/03/2024
Includes hospitals and elderly care centers.
Healthpeak Properties is one of the notable healthcare REITs in our portfolio6. Its strategy is to invest in private-pay healthcare real estate that benefits from the aging population and the universal desire for improved health. In particular, it focuses on life science and medical offices.
Source: Healthpeak Properties.
6Part of the portfolio as of 31/03/2023
The retail sector, included in the Real Estate ETF by VanEck, comprises shopping centers, individual stores, large (regional) shopping malls, outlet centers, grocery-anchored shopping centers, and those that feature big box retailers.
Simon Property Group7 is an American company that specializes in investment in shopping malls, outlet centers and other centers that act toward building communities. Many of its centers play a crucial role in the cities where they operate, by, among other means, creating jobs and paying taxes to benefit the population. It is the largest shopping mall owner in the US. One of the notable members of its extensive portfolio is the Shops at Crystals in Las Vegas, Nevada.
Source: Simon Property Group.
7Part of the portfolio as of 31/03/2023
Because all or a portion of the Fund are being invested in securities denominated in foreign currencies, its exposure to foreign currencies and changes in the value of foreign currencies versus the base currency may result in reduced returns for the ETF, and the value of certain foreign currencies may be subject to a high degree of fluctuation.
The Fund's assets may be concentrated in one or more particular sectors or industries. A Real Estate ETF may be subject to the risk that economic, political or other conditions that have a negative effect on the relevant sectors or industries will negatively impact the Fund's performance to a greater extent than if the Fund’s assets were invested in a wider variety of sectors or industries.
