Housing sector

How ETFs let you get into the housing business without a heavy investment

If you want to track a specific index – like the housing sector – you might consider buying an ETF or “exchange-traded fund”, which is an investment product that is a collection of bonds, stocks or other assets, similar to a mutual. funds. ETFs are publicly traded and easy to buy.

“An investor may own a few ETFs, but they may ‘own’ hundreds of stocks inside a few names,” said David Auerbach, managing director of Armada ETF Advisors.

Armada ETF is the originator of the Home Appreciation US REIT ETF.

“Imagine owning a share of an S&P 500 ETF,” he said. “One ETF share equals exposure to 500 different stocks.

Teleprinter Security Last Switch Switch %
HOME TIDAL ETF TRUST HOME APPRECIATION US REIT 18.19 +0.16 +0.91%

Why ETFs?

According to Auerbach, one advantage of ETFs — over mutual funds — is that they are traded on exchanges during market hours.

“An investor doesn’t know what their mutual fund is worth until the end of the day when the fund’s ‘value’ is published online, whereas ETFs have a constant bid/ask spread and trade like an action,” he explained.

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ETFs are grouped together so you can own real estate stocks

Armada ETF Advisors invests in publicly traded real estate investment trusts, called REITs. A REIT is an entity or corporation that operates, finances or owns income-producing real estate. Auerbach says publicly traded REITs trade on an exchange, like stocks.

“For reference, there are currently 30 REITs in the S&P 500,” he said. “Any investor can throw a dart at the board and choose their favorites.”

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The benefit for investors, Auerbach said, is that an ETF wrapper gives an investor the ability to play 25, 100, 250, 500 shares in a “stock” and therefore only pay capital gains/losses. potential on a single title.

“For us, we are leveraging our deeply experienced REIT management team so that all investors can benefit from the team’s wisdom and experience as managers of their funds since all we know is this are REITs,” he said.

A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York, United States, December 28, 2021. (Reuters/Andrew Kelly/Reuters Pictures)

Additionally, Auerbach noted that the ETF’s packaging is “fully transparent” so investors can check the company’s website and see what all of its holdings are and can also see what the bid/ seller permanently during market hours compared to a mutual. funds.

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Understand the impact of the current real estate market

Armada takes a broad look at what’s happening in housing markets across the country. Auerbach said that due to the lack of supply for all demand, several REIT sectors are benefiting from this housing demand, including:

  • Apartment REITs
  • Single-family rental SCPIs
  • Manufactured Housing REITs
  • Retirement Housing REITs

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“Not everyone may be able to buy a home, but everyone is able to buy a tax-efficient ETF that plays into this upside-down housing situation,” Auerbach said. “As the only pure active residential REIT ETF in the market today with a deeply experienced REIT management team, we are able to provide this residential REIT expertise that all investors can benefit from through in-depth top-down and bottom-up analysis. . .”