Real Estate: The Underrated Alts Segment

Real estate headlines seem to only focus on bad news right now, from remote work’s impact on offices to struggles for city center retail. That isn’t the whole story, however. Indeed, the “real” real estate story may instead be the potent opportunities the space is offering right now on top of its traditional use as a diversifier. VettaFi’s head of research Todd Rosenbluth hosted a panel discussion during VettaFi’s Alternatives Symposium Tuesday on the topic.

Speaking with Fundamental Income’s Co-Founder, Partner and the CIO Alexi Panagiotakopoulos and DWS Investments director of liquid real assets, Americas product, Ed O’Donnell, Rosenbluth hosted a conversation looking at misconceptions, opportunities, and ETFs in real estate.

Digging Into Real Estate as an Alternative

To start, the trio talked broadly about real estate as an alternative asset class. For Panagiotakopoulos, real estate isn’t just an alternative and a source of diversification to equities and bonds, it’s also seen its own innovations.

“We’ve also seen a significant amount of innovation where you’re seeing liquid alternatives, private non traded alternatives and prior institutional investment asset class is now becoming more available to the retail investment advisor,” he said. “As energy takes hold, as retail ecommerce continues to grow, and people look for experiential travel or dining out experiences, it’s going to revolve around real estate

To O’Donnell, real estate is offering some real positives in income yields and distributed dividends, diversification across various landlords in economic subsectors, and more.

“This is more of a fundamental earnings stream of return and liquidity here and you’re getting a quote unquote, alternative return stream,” he said. “But, you’re not taking on liquidity, transparency or exclusive leverage to access that you’re maintaining daily liquidity, high transparency and high trading volumes.”