Exchange-traded funds expected to win over investors in 2018

Real estate exchange-traded funds (ETFs) are expected to win over investors next year, according to Catella’s latest Market Tracker, ‘Strategic Real Estate Allocation: on the way to a new world?’.

Almost 60% of the 100 multi-asset managers in Germany who took part in the survey expect real estate ETFs - which offer an especially liquid, low-cost way to invest in real estate - to emerge in the German market in 2019 to 2022, while only 13% do not foresee such positioning. ETFs could account for 5% of investors’ asset allocations, generating a return of around 3%, according to the survey.

‘Tactical aspects continue to be expressed in the presented analysis, especially expansion into vehicles for real estate secondaries and ETFs over the past 20 months, which appears to be more than just a vision,’ said Dr. Thomas Beyerle, head of group research at Catella, commenting on the results of the survey.

Real estate secondaries and real estate multi-manager funds proved popular with respondents, with 20% saying they would invest between 4% and 6% in real estate secondaries and 7.7% in multi-manager funds.

If key interest rates rise, private equity investments are also expected to profit by taking an additional 10% share of investor allocations. The yield expectation is in excess of 10%.

‘In the future, Catella Research expects an increase in the market volume of alternative real estate products, even if only by a very small degree,’ Beyerle added. ‘We see an increasing acceptance of real estate-based financial products on the part of multi-asset managers with yield expectations clearly “beyond the 5”’.