SSgA SPDR launches global real estate ETF

Oct 29th, 2012 | By | Category: Alternatives / Multi-Asset

SPDR ETFs, the exchange-traded funds platform of State Street Global Advisors (SSgA), has expanded its European offering with the launch of the SPDR Dow Jones Global Real Estate ETF (GBRE). The fund has been listed on both the London Stock Exchange and the Deutsche Börse.

SSgA SPDR launches global real estate ETF

The SPDR Dow Jones Global Real Estate ETF (GBRE) provides access to a diversified portfolio of publicly traded real estate securities listed in developed and emerging market countries.

The fund, which is physically backed and fully UCITS-compliant, tracks the Dow Jones Global Select Real Estate Securities Index.

The Dow Jones Global Select Real Estate Securities Index measures the performance of publicly traded real estate securities and is designed to serve as a proxy for direct real estate investment.

The index measures both real estate investment trusts (REITs) and real estate operating companies.

To be included in the index, a company must be both an equity owner and operator of commercial and/or residential real estate. Excluded are companies that have more than 25% of their assets in direct mortgage investments, as well as certain businesses such as mortgage REITs, timber REITS, finance companies, home builders, and large landowners.

A company must also have a minimum market capitalisation of at least $200 million at the time of its inclusion (and $100 million on an ongoing basis), and at least 75% of its total revenue must be derived from the ownership and operation of real estate assets. It must also meet certain minimum requirements for liquidity.

The index has a total of 208 holdings, of which the top five are Simon Property Group with 6.14%, Westfield Group with 2.93%, Public Storage with 2.67%, Brookfield Asset Management with 2.59%, and HCP Inc with 2.54%. Its dividend yield is 3.62%.

The United States provides 53.40% of the companies in the index, while Japan contributes 8.06%, Australia 7.83%, Hong Kong 5.41% and Canada 5.36%. Twenty-three countries are represented in total. In terms of sector breakdown, Retail REITS dominate with 28.43%, followed by Specialised REITS with 14.75%, Office REITS with 13.55%, Diversified REITS with 10.57%, and Residential REITS with 10.26%.

The inclusion of emerging markets in the index enables investors to access property companies in rapidly growing countries that are likely to evolve to take greater prominence in the global property market. Emerging market countries represented include Brazil, Philippines, South Africa, Thailand, Poland, Malaysia and Turkey.

With a global exposure and an index beta of 0.68 versus the S&P 500 Index, the fund will appeal to investors seeking portfolio diversification opportunities. Beta is quantitative measure of the volatility of the index relative to the overall market, in this case represented by the S&P 500 Index. A beta above 1 is more volatile than the overall market, while a beta below 1 is less volatile.

Commenting on the launch, Scott Ebner, global head of product development at SPDR ETFs, said: “It can be challenging for clients to manage real estate allocations efficiently. The global and diversified nature of our new SPDR ETF could serve as a core real estate holding in a well-balanced portfolio.”

The fund comes with an annual Total Expense Ratio (TER) of 0.40% and is registered for sale in France, Germany, Ireland, Italy, Netherlands, Sweden, and the United Kingdom.

A US version of the fund, the SPDR Dow Jones Global Real Estate ETF (RWO), is listed on the NYSE Arca and has accumulated assets of $567 million since its inception in May 2008.

The launch of the fund takes the total number of SPDR ETFs listed on European exchanges to 43.

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