First ETF to track emerging-markets real estate is launched

Guggenheim Investments on Monday announced the launch of the first exchange-traded fund that focuses on real estate investments exclusively in emerging markets. The fund includes real estate developers, as well as a smattering of publicly traded real estate investment trusts. It's Guggenheim's fifth fund based on an index designed by AlphaShares, whose chief investment officer is Burton G. Malkiel, the index fund proponent and Princeton University economist. Until now, the firm has concentrated on building a variety of indexes narrowly focused on Chinese investment themes. “Emerging-markets real estate provides the potential for an attractive return stream that combines the growth potential from these regions' favorable geopolitical and demographic megatrends with an attractive yield component,” Mr. Malkiel said in a statement. In this case, emerging markets include 18 economies, including some of the world's largest: Brazil, China, India, Mexico and South Africa. Those economies accounted for 11% of listed real estate securities in July, up from 2% in 2000, according to Guggenheim, which cited four data sources for those figures. The fund charges 0.65% of assets each year in management fees. That compares with 0.14% for the iShares Global REIT (REET) and 0.43% for WisdomTree Investment Inc.'s Japan-focused real estate fund (DXJR), which hedges its currency exposure, meaning it attempts to guard against a decline in the value of the Japanese yen. Both of those ETFs were also launched this year. The Guggenheim fund does not hedge its exposure to foreign currencies.