Reveling in Industrial Real Estate

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

Over the last few years, it has been hit by a pandemic, high inflation and supply chain shortages. 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 type, may actually benefit if bond yields begin to come back down due to a slowing economy. Unlike the majority of real estate funds, which focus on all U.S.-listed real estate companies, INDS is far pickier, and the majority of its holdings derive the bulk of their revenue from industrial real estate ventures.

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

As seen in the chart below, INDS is a strong performer. Though it experienced a sharp dip in early June, it quickly regained its momentum. As of this writing, the stock is trading at $45.58, which is roughly a 10% gain since its June dip.

Currently, the fund has $302.95 million in net assets, a 0.60% expense ratio and a solid 1.96% yield.

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

In short, while INDS does provide investors with access to REITs, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.