The Emles Real Estate Credit ETF (REC) seeks to track the price and yield performance, before fees and expenses, of the Solactive U.S. Real Estate Bond Index, a market value weighted index designed to measure the performance of corporate bonds issued by U.S. companies in the real estate sector. 

Performance summary of Q3 2021

For the quarter ended September 30, 2021, Fund positions delivered -0.06% at NAV versus a benchmark return of 0.04% by the Bloomberg Barclays U.S. 5-10 Year Corporate Bond Index over the same period.

Quarter in review

Specialty Real Estate and Lodging/Resorts led contributions to total return as hospitality demand, property development, and travel restrictions suggest that a pandemic reopening is well underway.

Data centers led losses as allocations exhibited rate risk over a quarter that saw the 10Y Treasury Yield increase by more than 30bp from quarterly lows.

Looking ahead

We expect property sectors most directly affected by the pandemic—such as retail, apartments, and office properties— to continue their rally into the end of 2021. General exuberance across the sector appears to be fueled by inflation to real assets as opposed to inflation-driven impacts on corresponding corporate credit.

We remain conscious of portfolio impacts due to inflation, rising real rates, and the likely tapering of Fed accommodations in 4Q2021.

Infrastructure and Retail remain top property sector exposures for the Fund:

Full performance and holdings information can be found here.  

Tags: etf, Income, Interest rates