Investing in industrial real estate aimed at e-commerce can be much more than a pedestrian walk along a warehouse district for investors.
Contrary to popular belief, real estate is not exclusively limited to buying, selling, renting or renovating homes and other types of properties. In fact, real estate can run the gamut, as conveyed last week in my article about real estate related to data and infrastructure and this week’s article that delves into a real estate investment trust (REIT) exchange-traded fund (ETF) that focuses on investing in industrial real estate aimed at e-commerce.
Developed by Benchmark Investments, LLC., Pacer Benchmark Industrial Real Estate SCTR ETF (NYSE: INDS) is not the typical real estate investment fund. While most real estate investment funds focus on all U.S.-listed real estate companies, INDS invests in only industrial real estate REITs that are part of the e-commerce distribution and logistics networks that accumulate most of their revenue from real estate activities.
Specifically, INDS invests in industrial services such as warehouses, distribution centers and self-storage facilities, among others. Qualified companies are screened by property type, tenant type and revenue type. Moreover, each company must meet specific market cap and liquidity thresholds.
INDS caps its exposure to non-self-storage REITs at a maximum of 80% and it caps inclusion of individual securities at 15%. Further, companies with a market cap weighting of 4.5% or higher cannot comprise more than 45% of the fund. Ideally, this non-diversified fund will invest at least 80% of its value in net assets, plus any borrowed funds for investment purposes, in the industrial real estate sector.
INDS has an expense ratio of 0.60% and a dividend yield of 1.58%. The fund has $355.74 million in assets under management. Though this fund is fairly new, since it just was created in 2018, it appears to have found its footing over the past year.
In February 2021, the fund saw a spike, and then a small dip into March. It then climbed steadily before hitting another sharp dip in October. Currently, the fund is seeing a spike higher than it has all year and is at the high end of its 52-week range. INDS opened on Dec. 1 at $51.19, and its all-time high is $52.18, which bodes well for investing in industrial real estate aimed at e-commerce.
Chart courtesy of StockCharts.com
The fund’s top five holdings include Duke Realty Corp. (DRE), 14.95%; Prologis Inc. (PLD), 14.88%; Americold Realty Trust (COLD), 10.80%; Life Storage Inc. (LSI), 4.75%; and Innovative Industrial Properties Inc. Registered Shares (IIPR), 4.61%.
Though this is a fledgling fund, its approach to investing in the real estate sector appears to be a savvy one. With its particular interest in industrial REITs, its company scrutiny and its market-cap and liquidity criteria, Pacer Benchmark Industrial Real Estate SCTR ETF (NYSE: INDS) facilitates investing in industrial real estate aimed at e-commerce.
However, this type of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.