Weakness in ALPS Active REIT ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy receives a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a high quality exposure is rooted in holding stocks with low financial leverage and strong returns on equity. The longest-tenured manager has a wealth of experience, but other weaknesses limit it to a Below Average People Pillar rating. Although this strategy's parent firm still has a way to go to be a high-quality steward, it has bright spots like notable personal investments from managers but could focus on portfolio managers with modest tenures. As a result, the firm receives a Low Parent Pillar.

Analyst Rating

Equinix

Vici Properties

AvalonBay Communities

Public Storage

Invitation Homes

Simon Property Group

Welltower

Lexington Realty

Prologis

Equity Residential

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. ALPS Active REIT ETF earns a Below Average Process Pillar rating. 

The process is strengthened by low costs across its parent firm's funds, whose fees rank in their respective category's middle quintile on average. The pattern of low fees at the firm indicates that it is focused on delivering strong results for investors. However, the rating is held back by the parent firm's five-year retention rate of 64%, which suggests it could do more to retain its portfolio managers. The parent firm's five-year risk-adjusted success ratio of 45% also weakens the process. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

 This strategy leans toward smaller, more undervalued companies than its average peer in the Real Estate Morningstar Category. Analyzing additional factors, this strategy has held more highly liquid stocks compared to Morningstar Category Peers in the past few years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy also has had a position favoring high-quality stocks in recent years, which could contribute to higher downside risk protection. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. Additionally, this strategy has exhibited a tilt toward low-volatility stocks in these years, meaning companies with a lower historical standard deviation of returns over its peers. These low-risk stocks are typically at their best when markets are not. Low volatility exposure contributes to limited loss on the downside at the cost of a lag in bull markets. In this month, however, the strategy had more exposure to the Volatility factor than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in real estate by 3.5 percentage points in terms of assets compared with the category average, and its healthcare allocation is similar to the category. The sectors with low exposure compared to category peers are consumer cyclical and financial services; however, the allocations are similar to the category. The portfolio is positioned across 29 holdings and its assets are more dispersed than peers in the category. In particular, 56.1% of the fund’s assets are concentrated in the top 10 fund holdings, as opposed to the typical peer's 61.5%. And in closing, in terms of portfolio turnover, this portfolio trades more frequently than the average peer in its category, which may result in higher trading costs for investors and cause a drag on performance.

Below Average

Process

ALPS Active REIT ETF earns a Below Average People Pillar rating. The team benefits from the strategy's costs, which rank in its category's second least expensive quintile. A higher expense ratio reduces net returns, so low costs give this team an advantage. However, the rating is held back by the parent firm's five-year success ratio of 41%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 64% also detracts from the team.


Julia Pence’s veteran status, with 13 years of listed portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they manage is 5.0 stars, demonstrating stellar risk-adjusted performance.

People

ALPS has a ways to go to become an industry-standard steward, resulting in a Low Parent Pillar rating. Aside from the overall view, portfolio managers at ALPS have made a notable effort to align their interests with shareholders' by taking a personal stake and investing alongside them. Nearly 41% of the firm’s assets are represented by a manager who invests in their respective product. With an average asset-weighted tenure of eight years among the longest-tenured managers at ALPS, the firm is on par with peers. Seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fund fees on its products fall in the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Parent

ALPS Active REIT ETF

REIT is an actively managed ETF that provides exposure to publicly traded equity securities of US REITs.

JPMorgan BetaBuilders MSCI US REIT ETF

Camden Property

Direxion Daily Real Estate Bull 3x Shares

Direxion Daily Real Estate Bear 3x Shares

Fidelity MSCI Real Estate ETF

First Trust S&P REIT Index Fund

Host Hotels & Resorts

iShares Cohen & Steers REIT ETF

iShares U.S. Real Estate ETF

Nuveen Real Estate Income Fund

Invesco KBW Premium Yield Equity REIT ETF

Neuberger Berman Real Estate Securities Income Fund Inc

US Diversified Real Estate ETF

Invesco Active US Real Estate

ProShares Short Real Estate

Cohen And Steers Total Return Realty Fund

Cohen & Steers Reit And Preferred Income Fund Inc

Cohen & Steers Quality Income Realty Fund

SPDR Dow Jones REIT ETF

Schwab U.S. REIT ETF

Seven Hills Realty Trust

ProShares UltraShort Real Estate

Pacer Funds Trust-Pacer Benchmark Data & Infrastructure Real Estate Sector ETF

Active managers typically underperform their passive benchmarks. REITs are an exception in which stock-picking can be lucrative. I explain why this is.

Why I'm Steering Clear Of REIT ETFs

ProShares Ultra Real Estate

iShares Core U.S. REIT ETF

Vanguard Real Estate ETF

REITs experienced a 26% drop in prices due to rising interest rates, creating opportunities for investors. Despite the overall decline, many REIT sectors, such as industrial, multifamily, and manufactured housing, showed strong FFO/share growth. The market pricing of REITs did not align with their fundamental performance, creating mispricing in sectors like retail, towers, and self-storage.

2 Years Of Gloom Have Done Interesting Things To REIT Valuation

Alerian MLP ETF

OShares U.S. Quality Dividend ETF

RiverFront Dynamic US Flex-Cap ETF

WisdomTree Bloomberg Floating Rate Treasury Fund

Bull vs. Bear is a weekly feature where the VettaFi writers' room takes opposite sides to debate controversial stocks, strategies, or market ideas — with plenty of discussion of ETF ideas to play either angle. For this edition, Nick Wodeshick and Nick Peters-Golden debate whether rate cuts will still arrive this year.

Bull vs Bear: Will Rate Cuts Still Happen This Year?

Amid concerns about the strength of the office property market and delays to the Federal Reserve's interest rate reduction plans, some investors may be passing on real estate investment trusts (REITs) and related trusts. In theory, that's a logical move.

Data Center REITs Support Case for This Real Estate ETF

It's not often that an investment class breaks into the broader news ecosystem, but real estate, and REITs, have taken up a lot of headlines. It's hard to avoid frequent stories about urban doom loops, office real estate issues, and other dark clouds over the space.

Think You Know REITs? Here's the Real Story

Alexandria Real Estate Equities

Broadstone Net Lease

Blackstone Group

CTO Realty Growth

CareTrust REIT

Diversified Healthcare Trust

Ellington Residential Mortgage REIT

Empire State Realty Trust

Highwoods Properties

Independence Realty Trust

LTC Properties

Realty Income Corp

Virtus Real Asset Income ETF

U.S. equity markets declined this week while benchmark interest rates jumped to the highest level since November after stronger-than-expected employment data showed robust hiring trends in early 2024. Stagflation has crept back into the economic discussion over the past several weeks amid a resurgence in oil prices alongside economic data showing stubbornly lukewarm inflationary trends. Following two straight weeks of gains which had lifted the benchmark to record-highs, the S&P 500 declined by 0.9% this week. Real estate equities were among the laggards this week.

A Crude Problem

American Tower

Essex Property Trust

H&R Block

Real estate investment through REITs is popular because REITs distribute generous dividends and also they're easy to understand.

Investing In Real Estate Through REITs

Healthpeak Properties Inc

Ellington Financial

Extra Space Storage

Global Net Lease

Kimco Realty

Gladstone Land

Ready Capital Corp

Regency Centers

Two years of persistent rate-driven pressure on commercial and residential real estate markets appeared to be easing in early 2024, but firming inflation has again muddied the outlook. Expectations of "Higher for Longer" have merely shifted to "High for Long." Many private equity funds and some highly-levered REITs were ill-prepared for a period of sustained 4-5%+ benchmark rates. Private markets are finally feeling the pain that beset public REIT investors since 2021. Commercial property values have now declined over 20% nationally, and nearly 40% in some troubled segments.

State Of REIT Nation: Not Out Of The Woods, Yet

Is now the time to get back into REITs? Media headlines may have previously dissuaded investors from real estate, but the landscape is changing.

Beyond the REIT Headlines: The Case for an Active REIT ETF

Getting exposure to the real estate market requires a more creative slant given the challenges in residential and commercial real estate. One area investors may not have considered in the burgeoning tech arena is real estate that caters to data centers.

Data Centers Growth Should Provide Tailwinds for This ETF

How REITs have fared through high interest rate environment. Takeaways from REITs earnings season so far. When rate cuts do come, some REIT sectors may stand to benefit.

Why Lower Rates Could Lead To Opportunities In REITs This Year

As the world gets increasingly reliant on digital technology, the buildout of infrastructure will be a necessity via data centers. That growth is boosting stocks like Equinix and ETFs focused on real estate investment trusts like the ALPS Active REIT ETF (REIT).

Expansion of Data Centers Can Help Propel REIT ETF

As measured by the S&P Select Sector Real Estate Index, real estate stocks are struggling this year, as that gauge is lower by 3.47%. However, some market observers remain constructive about real estate stocks.

REIT Leaders Might Reside in This ETF

The real estate sector represents a mere 2.31% of the S&P 500. Just two sectors – materials and utilities – command smaller allocations in the benchmark domestic equity gauge.

Popularity of REITs Could Be Positive for This ETF

The yield on 10-year Treasury Inflation-Protected Securities TIPS fell significantly from ~2.5% to ~1.7% in the last two months of 2023. How does this affect real estate? As long-lived, fixed assets with inflation-protective characteristics, quality real estate can be viewed as an equivalent to TIPS plus a risk premium.

An Opportunity For REITs To Shine In 2024

When ETF investors want real estate exposure, they're not relegated to just the residential market. That's imperative in the current market environment.

This Active ETF Has Flexibility in a Changing Real Estate Market

AGNC Investment

Boston Properties

Crown Castle International

iShares CMBS ETF

Dynex Capital

Equity LifeStyle Properties

Jones Lang LaSalle

iShares MBS ETF

Medical Properties Trust

Orchid Island Capital

U.S. equity markets notched another week of gains after a busy slate of economic data and corporate earnings results were broadly consistent with a "soft landing" trend for the domestic economy. Ahead of the Federal Reserve's first policy meeting of 2024, the FOMC's favored inflation gauge - Core PCE - showed a "2-handle" for the first time in nearly two years. Notching a series of record highs through the week, the S&P 500 advanced 1.2%, extending its impressive rally since late October to 12 of the past 13 weeks.

Fed Looms As Earnings Begin

After lagging equities for the past two years, REITs offer an attractive investment opportunity in 2024. Peaking or falling yields have historically been a catalyst for strong REIT market outperformance.

2024 Listed REITs Outlook

Real estate earnings season kicked into gear this week, and over the next month, we'll hear results from 175 equity REITs, 40 mortgage REITs, and dozens of housing industry companies. The sector with perhaps the most to gain from moderating inflation and a normalization in Fed monetary policy, REITs enter earnings season with upside momentum after a dismal eighteen-month stretch. Sentiment and macroeconomic conditions have improved significantly in the past quarter, fueled by several months of encouraging inflation data pointing once again towards a "soft landing" for the domestic economy.

REIT Earnings Preview: Animal Spirits Revived?

D.R. Horton

Hannon Armstrong Sustainable Infrastructure Capital

M.D.C. Holdings

MFA Financial

Pebblebrook Hotel Trust

U.S. equity markets posted another week of gains as investors weighed conflicting indications on economic momentum and the need for rate cuts, with strong economic data offsetting soft corporate earnings. Swaps markets are now pricing in roughly 45% probability that the Federal Reserve will begin its rate-cutting cycle in March, down from odds of over 80% in the prior week.

Rate Cut Rethink

CubeSmart

National Storage Affiliates Trust

Global Self Storage

Self-Storage REITs delivered incredible growth early in the pandemic driven by surging housing market activity, but have been victims to their own success of late amid a supply-driven cooldown. Robust double-digit rent growth and relatively low operational barriers to entry prompted a wave of new development, with a roughly 12% expansion in total supply expected between 2022 and 2024. This supply boom - twice the magnitude of the multifamily sector - has reignited fierce "storage wars" between competing facilities, which has led to double-digit dips in new lease rates since mid-2022.

Storage REITs: Victims Of Own Success

Apartment Income REIT Corp

Clipper Realty

Centerspace REIT

Elme Communities

Mid-America Apartment Communities

NexPoint Residential Trust

Apartment REITs were among the weakest-performing property sectors for a second-straight year in 2023 - lagging even the battered office sector - despite delivering another year of mid-single-digit earnings growth. Following two years of record-setting rent growth, residential rents decelerated in 2023 alongside a broader cooling of inflationary pressures, with multifamily rents seeing a particularly sharp cooldown amid supply headwinds. The wave of pandemic-era development - started at a time when rents were rising double-digits - resulted in a record year of new deliveries in 2023 with similarly elevated supply levels.

Apartment REITs: A Renter's Market

VanEck Vectors BDC Income ETF

Energy Transfer LP Unit

SPDR Gold Trust

JPMorgan Equity Premium Income ETF

Schwab US Dividend Equity ETF

iShares Silver Trust

Virtu Financial

Utilities Select Sector SPDR Fund

Successful dividend investing requires proper diversification, not just picking stocks. Broadly diversified ETFs may not be enough for sufficient diversification, or at least may meaningfully underperform an intelligently weighted portfolio. We share three undervalued and high-yielding dividend stocks that are expected to thrive amidst the shifting macroeconomic and geopolitical landscapes expected to unfold in 2024.

3 Top High-Yield Dividend Stocks For 2024

Avantis Real Estate ETF

Cambria Global Real Estate ETF

Active REIT ETFs are a strong choice for 2024 as they can potentially offer uncorrelated returns to portfolios. REIT ETFs allow investors to gain exposure to the real estate market via a tax- and cost-efficient, highly liquid vehicle.

4 Active REIT ETFs for 2024

In yet another sign of real estate's strong end to 2023, the active real estate ETF REIT is sending signals. Specifically, the ALPS Active REIT ETF (REIT), saw its price rise above its 200-day simple moving average (SMA) to start December.

Eye Active Real Estate ETF REIT's Tech Action

News for ALPS Active REIT ETF ETF (REIT)