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Guggenheim Debuts First EM Real Estate ETF


Guggenheim Investments, the seventh-largest U.S. issuer of exchange traded funds, launched the Guggenheim Emerging Markets Real Estate ETF (NYSEArca:EMRE) Monday, the first ETF dedicated solely to real estate assets in developing economies.

Guggenheim is no stranger to emerging markets real estate ETFs as the firm is the issuer behind the country-specific Guggenheim China Real Estate ETF (TAO) . Like TAO and several other Guggenheim ETFs, such as the Guggenheim China Small Cap Index ETF (HAO) and the Guggenheim China All-Cap ETF (YAO) , the Guggenheim Emerging Markets Real Estate ETF will track an AlphaShares index. [Guggenheim ETF to Get Some Alibaba]

EMRE, which charges 0.65% per year, tracks the AlphaShares Emerging Markets Real Estate Index. “The index is designed to measure and monitor the performance of the investable universe of publicly traded companies and real estate investment trusts that derive a majority of their revenues from real estate development, management and/or ownership of property in the countries of the S&P BMI Emerging Markets ,” according to a statement issued by Guggenheim.

The timing of EMRE’s debut is appropriate as investors will now have a dedicated ETF to profit from the growing footprint of developing countries on the international real estate stage. In 2000, emerging markets’ share of the global real estate securities market was just $7 billion, or 2%, according to Guggenheim data. As of July 2014, those numbers had swelled to $155 billion, or 11%.

“Trends behind that growth include urbanization, increasing consumerism from an expanding middle class, rising foreign direct investment, and the creation of investment-friendly vehicles that provide access to the local real estate industry,” said Guggenheim.

Long-term investors could find EMRE an appealing option with which to diversify their real estate corners of their portfolios as a billion emerging markets residents are expected to flock to urban areas by 2025.

The average market value of the nearly 120 securities held in EMRE is just over $5 billion, giving the ETF utility as an option for investors looking for mid-cap exposure. [Equal-Weight Advantage]

Countries found in EMRE’s lineup include Brazil, Chile, China, Egypt, Hong Kong, India, Indonesia, Malaysia, Mexico, Morocco, Philippines, Poland, Russia, South Africa, Singapore, Taiwan, Thailand, and Turkey. The new ETF will not include China A-shares, the equities traded on the mainland of the world’s second-largest economy.

China is the AlphaShares Emerging Markets Index’s largest country weight at nearly 35.4%, followed by an almost 12.1% weight to South Africa and an 8% weight to the Philippines.