Active Real Estate Managers Are Eyeing These Areas

Core Insights - The article emphasizes the advantages of active management in the real estate investment trust (REIT) sector, suggesting that it can outperform passive strategies over the long term [1] Group 1: ALPS Active REIT ETF - The ALPS Active REIT ETF, which will celebrate its five-year anniversary in February, is highlighted as a viable option for investors, especially given the current strong balance sheets and positive trends in funds from operations (FFO) metrics within the real estate sector [2] - The ETF offers a solid dividend yield of 3.12% and provides flexibility through active management, which can help investors identify which areas of the real estate sector are attracting professional asset allocators [3] Group 2: Sector Exposure - The ALPS ETF has a significant allocation of 19.48% to healthcare REITs, marking it as the second-largest subgroup weight within the ETF [4] - Telecommunications is noted as the most overweight sector, with investments at 135% of its index weight, while the office sector has shifted from underweight to overweight for the first time since early 2020 [5] - The ETF's largest subgroup exposure is to specialized REITs, which includes data center landlords, indicating a connection to the AI trade [6] Group 3: Shifts in Real Estate Management - Active real estate managers are increasingly shifting their focus towards lodging and retail landlords, both of which are represented in the ALPS ETF, with retail REITs making up 14% of the portfolio [7] - The lodging/resorts sector has nearly reached parity with its index weight, now at 99%, while retail and industrial sectors remain underweight at 76% and 80% of their index shares, respectively [8]