Actively managed real estate ETF aims to provide durable growth amid inflationary pressures with concentrated exposure to non-traditional REIT sectors
Principal Global Investors® announced the Principal Real Estate Active Opportunities ETF (Ticker: BYRE), the firm’s first semi-transparent ETF, is available for trading upon today’s market open of the New York Stock Exchange. It is a new, actively managed, semi-transparent ETF that has a focused concentration on the non-traditional property sectors of the publicly traded U.S. real estate market. The objective of the fund seeks total return.
“The Principal Real Estate Active Opportunities ETF combines two core strengths of Principal – active management and real estate investing – to provide clients with an innovative strategy that seeks to improve portfolio outcomes. The fund is thematic and one of the first semi-transparent ETFs that gives investors exposure to in-demand real estate sectors with the benefits of a liquid ETF structure,” said Jill Brown, managing director of the U.S. Wealth Platform, Principal Global Investors.
Due to its concentrated exposure to non-traditional property sectors, the Principal Real Estate Active Opportunities ETF can enhance core equity portfolios for investors as a satellite allocation. This creates the potential for better portfolio outcomes and higher total returns with improved diversification generated by the resilient growth characteristics of many public REITs in the non-traditional sectors.
Non-traditional real estate sectors, which include property types like data centers, life sciences, single-family rental, medical office, and self-storage, have been highly resilient the past few years. Shifts in the economy and structural themes ranging from demographics and infrastructure to globalization and technological innovation are driving change and opportunity for these non-traditional property types.
“Non-traditional sectors now represent 64% of the public REIT market as they almost doubled their share of the market cap from 2010-2020. And compared to traditional real estate sectors, non-traditional REITs have offered higher returns and higher growth over the last 10 years1,” said Todd Kellenberger, client portfolio manager for Principal Real Estate Investors. “This reinforces our conviction that our semi-transparent ETF that is focused on these niche property types can be a differentiated strategy for investors seeking resilient growth and potential inflation protection.”
As a top 10 global manager of real estate assets2 and a top five manager of public REITs3, Principal is well positioned to deliver this new ETF in a growing part of the actively managed ETF market. The strategy will be managed by the firm’s dedicated real estate investment team using a bottom-up approach that will emphasize owning publicly traded U.S. real estate companies in non-traditional sectors that can benefit from structural drivers.
Carefully consider a fund’s objectives, risks, charges, and expenses. Contact your financial professional or visit principalfunds.com for a prospectus, or summary prospectus if available, containing this and other information. Please read it carefully before investing.
Investing involves risk, including possible loss of principal.
The Fund is new and there is no guarantee that the fund will meet its objective.
Asset allocation and diversification do not ensure a profit or protect against a loss.
This ETF is different from traditional ETFs.
Traditional ETFs tell the public what assets they hold each day. This ETF will not. This may create additional risks for your investment. For example: You may have to pay more money to trade the ETF’s shares. This ETF will provide less information to traders, who tend to charge more for trades when they have less information. The price you pay to buy ETF shares on an exchange may not match the value of the ETF’s portfolio. The same is true when you sell shares. These price differences may be greater for this ETF compared to other ETFs because it provides less information to traders. These additional risks may be even greater in bad or uncertain mark market conditions. The ETF will publish on its website each day a “Tracking Basket” designed to help trading in shares of the ETF. While the Tracking Basket includes some of the ETF’s holdings, it is not the ETF’s actual portfolio. The differences between this ETF and other ETFs may also have advantages. By keeping certain information about the ETF secret, this ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETF’s performance. If other traders are able to copy or predict the ETF’s investment strategy, however, this may hurt the ETF’s performance.
For additional information regarding the unique attributes and risks of this ETF, see the additional risk discussion at the end of this material and the Principal Risks section of the prospectus.
Real estate investment options are subject to some risks inherent in real estate and real estate investment trusts (REITs), such as risks associated with general and local economic conditions. Investing in REITs involves special risks, including interest rate fluctuation, credit risks, and liquidity risks, including interest conditions on real estate values and occupancy rates.
The Fund is considered non-diversified, which means it can invest a higher percentage of assets in securities of individual issuers than a diversified fund. As a result, changes in the value of a single investment could cause greater fluctuations in the Fund’s share price than would occur in a more diversified fund.
Investing in ETFs involves risk, including possible loss of principal. ETFs are subject to risk similar to those of stocks, including those regarding short-selling and margin account maintenance. Investor shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Ordinary brokerage commissions apply.
Principal Real Estate Investors is a dedicated real estate investment management group within Principal Global Investors.
ALPS Distributors, Inc. is the distributor of the Principal ETFs. ALPS Distributors, Inc. and the Principal Funds are not affiliated.
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1 Based on annualized 10-year trailing returns as of March 31, 2022, using the FTSE All Equity REIT Index as the benchmark |
2 Managers ranked by total worldwide assets (net of leverage), as of October 2021. “Largest Real Estate Managers,” Pensions & Investments |
3 Managers ranked by total U.S. institutional assets (net of leverage), as of October 2021. “Largest Real Estate Managers,” Pensions & Investments |
About Principal Global Investors
Principal Global Investors® leads global asset management at Principal®. As a multi-investment team firm, we bring a focused perspective and offer expertise across a host of asset classes.
At our core, we are driven by our purpose to help investors and businesses achieve their financial goals. Our global investment professionals deliver investment solutions for public and private pension funds, foundations and endowments, central banks, insurance companies, sub-advisory arrangements, sovereign wealth funds and individual portfolios.
Principal Global Investors manages approximately $579.4 billion in assets on behalf of over 800 institutional clients located in over 80 markets as well as retirement plans and individual clients, reflecting our worldwide market reach and experience and our commitment to high-quality research and service (as of March 31, 2022). To find out more, visit us at principalglobal.com.
About Principal Real Estate Investors
Principal Real Estate Investors manages or sub-advises $106.2 billion in commercial real estate assets (as of March 31, 2022). The firm's real estate capabilities include both public and private equity and debt investment alternatives. Principal Real Estate Investors is the dedicated real estate group of Principal Global Investors, a diversified asset management organization and a member of the Principal Financial Group®.
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Contacts
Phillip Nicolino, 515-362-0239, nicolino.phillip@principal.com
