BlackRock launches passive real estate fund

BlackRock launches passive real estate fund

BlackRock has said a new property-focused exchange traded fund (ETF) it is launching will aim to “accurately reflect” the returns possible from real estate.

The group said the iShares MSCI Target UK Real Estate Ucits ETF will track an index which consists of real estate investment trusts (Reits) - a common route for property investors.

BlackRock said it would “reduce volatility by giving higher weightings to lower volatility stocks” and would use the balance sheets of Reits to calculate the average proportion of debt across the Reit portfolio.

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The ETF will also have an allocation to inflation-linked government bonds “to reduce leverage and provide inflation protection”.The launch comes shortly after iShares launched a similar fund targeting the US real estate market.

Tom Fekete, head of product development for iShares in Europe, Middle East and Africa, said investors were increasingly looking at property for yield.

“[But] hamstrung by high barriers to entry, direct investment in real estate is not always a viable option, and this is particularly the case for those investors with a small amount of capital to invest,” he said.

“Our fund aims to mitigate these issues in a cost-efficient manner, and offer instant access to an asset class that is otherwise considered to be illiquid.”