SS&C ALPS Advisors has launched the ALPS Active REIT ETF (REIT US), a new actively managed ETF providing exposure primarily to US real estate investment trusts.
Craig Leupold, CEO of GSI Capital Advisors.
REITs have historically provided investors with income, portfolio diversification, and the potential for long-term total return.
The fund has listed on Nasdaq Exchange and comes with an expense ratio of 0.68%.
It is the first to harness Blue Tractor‘s ‘Shielded Alpha’ semi-transparent ETF structure which protects a portfolio manager’s trading intentions while retaining certain favourable ETF characteristics such as an effective arbitrage mechanism, tax efficiency, and intraday tradability.
Management of the fund is led by GSI Capital Advisors, a California-based investment manager specializing in real estate securities which acts as the fund’s sub-adviser.
Investment approach
The fund targets US-focused real estate securities from across the market cap spectrum – this is defined as either US-listed property-related stocks or those deriving more than half of their revenue or profits from US properties.
Whilst the fund primarily invests in common shares of REITs, it may also hold other real estate securities including real estate operating companies and preferred shares of REITs.
The fund’s managers select securities with the largest discounts to the intrinsic value of underlying properties, as calculated by GSI. Intrinsic value is determined through fundamental research analyzing capitalization rates, net operating income growth, the valuation of land and other assets, and the value of company debt.
The portfolio is expected to maintain a high-conviction approach. The top ten holdings currently account for almost 60% of the fund.
Craig Leupold, CEO of GSI Capital Advisors, commented: “GSI Capital Advisors is excited to partner with SS&C ALPS Advisors to bring our boutique investment approach and 50-plus years of collective investment experience to an innovative investment product. The ALPS Active REIT ETF enables access to our active REIT strategy in an investor-friendly, cost-efficient structure. Our focused expertise in the publicly traded real estate securities space makes us ideally suited to deliver attractive, risk-adjusted returns to investors seeking to add REITs to their portfolios.”
Laton Spahr, President of SS&C ALPS Advisors, added: “Our team is committed to providing advisors and institutions with industry-leading investment solutions. The ALPS Active REIT ETF is part of our natural evolution to expand investor access to actively managed, alpha-generating, and institutional-quality investment managers.”
Blue Tractor’s Shielded Alpha
The Blue Tractor Shielded Alpha model involves the daily publishing of all fund holdings in an allocation that reflects at least 90% of the ETF’s actual portfolio weights. The deviation between published and actual weights is determined using an algorithm that changes daily but is also aimed at reducing tracking error between the two portfolios. Actual ETF holdings are disclosed on a quarterly basis.
Terry Norman, Founder of Blue Tractor Group, said: “Our Shielded Alpha ETF structure permits active portfolio management within an ETF wrapper. We’re thrilled to be working with both SS&C ALPS Advisors and GSI Capital Advisors to provide the technology to support the introduction of this active REIT strategy in a way that benefits both investors and asset managers.”