Rising interest rates have adversely impacted many fixed-income investments, pushing investors into alternative asset classes. For example, real estate mixes capital appreciation with income generation. Rising rents could increase real estate investment yields while property values have been rising across much of the U.S.
Let’s look at five active ETFs that you can use to generate income for your portfolio.
See our Active ETFs Channel to learn more about this investment vehicle and its suitability for your portfolio.
1. Invesco Active U.S. Real Estate ETF (PSR)
The Invesco Active U.S. Real Estate ETF (PSR) uses quantitative and statistical metrics to identify attractively priced real estate investment trusts (REITs) in the FTSE NAREIT All Equity REITs Index. In particular, the fund managers look at relative valuations, risk-return profiles, fundamental changes or new opportunities.
Currently, the fund holds a total of 80 REITs, including SBA Communications Corp. (6.2%), American Tower Corp. (6.18%) and Crown Castle International Corp. (6.01%).
- Total Assets: $124.5 Million
- 1-Year Performance: 20.67%
- 30-day SEC Yield: 2.22%
- Expense Ratio: 0.35%
2. ALPS Active REIT ETF (REIT)
The ALPS Active REIT ETF (REIT) invests primarily in office, apartments, industrial and retail properties, although fund managers have the flexibility to expand into non-core property types. Unlike PSR’s statistical approach, the GSI Capital Advisors team uses a research-driven, high-conviction and flexible investment process.
Currently, the fund holds a total of about 30 real estate companies, including Equinix Inc. (9.03%), AvalonBay Communications Inc. (7.31%) and First Industrial Realty Trust Inc. (5.97%).
- Total Assets: $19.9 Million
- 1-Year Performance: N/A
- 30-day SEC Yield: 2.06%
- Expense Ratio: 0.68%
3. Janus Henderson U.S. Real Estate ETF (JRE)
The Janus Henderson U.S. Real Estate ETF (JRE) invests in REITs and real estate-related businesses by combining local property knowledge with a repeatable, disciplined investment process. Like the REIT ETF, the fund has a highly concentrated portfolio of high-conviction ideas that target specific subsets of the industry.
Currently, the fund holds a portfolio of about 20 real estate businesses, including Prologis Inc. (11.65%), Sun Communities Inc. (6.84%) and Alexandria Real Estate Equities Inc. (6.67%).
- Total Assets: $10.5 Million
- 1-Year Performance: N/A
- 30-day SEC Yield: 1.57%
- Expense Ratio: 0.65%
4. Fidelity Real Estate Investment ETF (FPRO)
The Fidelity Real Estate Investment ETF (FPRO) invests at least 80% of its assets in securities of companies in the real estate industry, including both foreign and domestic issuers. Using fundamental analysis, the fund’s managers look at each issuer’s financial condition and industry position, as well as market and economic conditions, to select investments.
- Total Assets: $22.6 Million
- 1-Year Performance: N/A
- 30-day SEC Yield: 1.67%
- Expense Ratio: 0.59%
5. Goldman Sachs Future Real Estate and Infrastructure Equity ETF (GREI)
The Goldman Sachs Future Real Estate and Infrastructure Equity ETF (GREI) aims to keep investors on the right side of disruption by reaching beyond backward-looking benchmarks to identify innovative, attractively valued companies. However, unlike other funds on our list, the ETF only holds about half (54.5%) of its portfolio in real estate.
Currently, the fund’s portfolio includes nearly 50 securities, including National Grid plc (5.3%), Vinci SA (4.9%) and American Tower Corp. (4.8%). Aside from real estate, the fund also invests in utilities (25.7%), industrials (10.9%) and other sectors worldwide.
- Total Assets: $18.2 Million
- 1-Year Performance: N/A
- 30-day SEC Yield: 1.08%
- Expense Ratio: 0.75%
Don’t forget to explore our Dividend Guide where you can access all the relevant content and tools available on Dividend.com based on your unique requirements.
The Bottom Line
Real estate provides a high-yielding alternative to conventional fixed-income investments, such as bond portfolios. By choosing active ETFs, investors can target exposure to specific areas of the market that may be poised for growth rather than simply investing in the largest REITs.
Take a look at our recently launched Model Portfolios to see how you can rebalance your portfolio.
