Delight in industrial real estate

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There is nothing typical about the state of the current economy.

In recent years, it has been hit by a pandemic, high inflation and shortages in the supply chain. However, not all atypical things are bad, and one example is the exchange-traded fund (ETF) Pacer Benchmark Industrial Real Estate SCTR ETF (NYSE: INDS).

The fund, along with several others of its kind, could actually benefit if bond yields start to come back down due to a slowing economy. Unlike the majority of real estate funds, which focus on all US-listed real estate companies, INDS is much more selective and the majority of its holdings derive the bulk of their income from industrial real estate businesses.

These industrial real estate businesses include warehouses, distribution centers and self-storage facilities. This non-diversified fund invests at least 80% of its assets in the industrial real estate sector and individual securities are capped at 15%. Its underlying index is rebalanced quarterly.

As shown in the chart below, the INDS is showing strong performance. Although it experienced a sharp decline in early June, it quickly regained momentum. As of this writing, the stock is trading at $45.58, a roughly 10% gain since its June decline.

Currently, the fund has net assets of $302.95 million, an expense ratio of 0.60% and a strong yield of 1.96%.

The ETF’s top five holdings include Duke Realty Corp. (DRE), 14.95%; Prologis inc. (PLD)14.88%; American Realty Trust (COLD)10.80%; Storage Life Inc. (LSI), 4.75%; and Innovative Industrial Properties Inc registered Shs (IIPR)4.61%.

In short, although INDS offers investors access to REITs, this type of ETF may not be suitable for all portfolios. Thus, interested investors should always do their due diligence and decide whether the fund is suitable for their investment objectives.

As always, I’m happy to answer any questions you have about ETFs, so feel free to email me. You may see the answer to your question in a future ETF Talk.

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