The new ETF makes a big bet on real estate and other hard assets.
CBRE investment management launched IQ CBRE Real Assets ETF in May with the idea that it would provide protection against inflation in a rising interest rate environment.
“The ETF market lacks options in this space,” ETF portfolio manager Dan Foley told CNBC.ETF Edge” on Thursday. “With secular changes in things like digital transformation, decarbonization and then, frankly, poor pricing in the market, there’s a lot of opportunity.
Pointing out that global financial institutions are already in the space, Foley said he believes retail investors should be as well.
“It was one of the most attractive segments of the real asset world,” Foley said. “The award is very convincing… [The] the elements are in place for a pretty strong overall return going forward.”
CBRE’s new ETF hits the market as excitement around AI and technology companies dominates Wall Street.
Foley argued that hard assets in general are an important diversifier from tech — particularly hot AI stocks. Additionally, he noted that hard assets are critical to enabling the digital economy in the first place.
“Data centers, cell towers, enabling decarbonization – you need these leading infrastructure companies to make that investment. It’s a growth driver that we think will lead to a differentiated outcome,” he said.
According to issuer New York Life Investments, the fund’s top holdings are in real estate and utilities. They contain Public repository, Crown Castle, Nextera Energy and Equinix (EQIX), which is considered a leader in the field of data centers.
Equinix shares are up 7% in the past month.
“Equinix is a great example of a world-leading entity,” said Foley. “Those are the kind of assets you want. They’re essential to the new economy.”
That’s down nearly 6% since the IQ CBRE Real Assets ETF launched on May 10.