Proptech ETF from ETF Managers Group
ETF Managers Group is launching the world’s first property technology ETF, that buys into technology companies focussed on real estate.
The ETFMG Real Estate Tech ETF (HHH) tracks the Prime Real Estate Technology Index, which is managed by Level ETF Ventures.
HHH holds a basket of 35 stocks that the index provider deems to be global property tech stocks. As with some other niche thematic ETFs, the theme is defined in a freewheeling and a priori way. It seems to start with an idea of the stocks that it wants, and then walks backwards to find an index methodology that generates the basket.
For HHH, compares are property technology businesses if they:
- List or advertise properties for sale;
- Provide real estate brokerage;
- Software-driven home insurance and mortgages;
- Facilitating homeware and improvement services
At the time of writing, the top holdings include AirBNB, Zillow, Open Door, and REA Group.
It charges 0.75%.
Bernie’s commentary – this is a great idea
From what I can tell there’s no real index methodology to this ETF. ETF Managers Group has decided that property technology is a thing. And decided that there are 35 small and mid-cap companies connected to this theme. And then reverse engineered the index with this in mind. This is very much one-shot active management disguised as an ETF.
Personally I have no problem with this approach though as I think theme is real and that this fund will outperform. We have technology for all other kinds of sectors: healthcare, finance, agriculture. There are thematic tech ETFs for all of them. Why not one for property as well?
Not only that, but have you ever actually bought and sold a house? It is so much work. There is obvious opportunity for technology to make things less work and faster. And what’s more, the technology would be welcomed by incumbents: banks, landlords and real estate agents, as the grunt work annoys them to. The cherry on the cake of course is that the property market is massive.
So count me in for this one. Property technology is a great idea.