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Saturday, December 6th 2008, 11:17 AM
It may seem crazy asking the question, but is now a good time to buy investment real estate?
Many investors might be permanently spooked, but Invesco PowerShares hopes you think so, if not now, over time.
Even though the share prices of real estate investment trusts have been brutally hammered, along with most other investments, over the past year, PowerShares recently launched a REIT exchange-traded fund.
The difference is that PowerShares Active U.S. Real Estate Fund is the first REIT ETF to feature active management of its portfolio, rather than tracking an index.
Although the fund picks its holdings from a REIT index, the 13-member investment team can shun underperforming parts of the sector or stash assets in cash if good investment opportunities are not available.
As Ed McRedmond, senior vice president of portfolio strategies at Invesco PowerShares, said, “We believe that active management in the real estate space has the potential to add value.”
Since the benchmark FTSE NAREIT Equity REITs Index has had an atrocious total return of -56.9% through Dec. 1, the timing of the new fund may be auspicious. “On a relative basis, [the managers] were seeing some attractive valuations in real estate securities,” McRedmond said.
Nonetheless, so far, the ETF has seen very light trading. Many investors are steering clear of real estate picks until they have a clearer idea of when real estate prices will bottom nationally.
McRedmond thinks the new fund will find a market.
“There is always going to be demand from investors for some exposure to real estate,” he said.