Stable returns and growth potential make real estate investments a valuable portfolio component. UBS ETFs are a cost-effective and liquid way to invest in the Swiss real estate market.
What are the characteristics of real estate investments?
Real estate investments share similar characteristics with stocks and bonds. They generate the potential for regular returns and offer opportunities for capital growth. Thanks to the hybrid nature of real estate investments, they often deliver more stable returns, making them an attractive asset class.
As a rule, returns on real estate have a relatively low correlation with those of traditional asset classes such as stocks and bonds. Adding low correlation investments to a portfolio can reduce its overall risk.
At a given level of risk, real estate also offers the opportunity for capital growth and thus a higher return potential.
Protection against inflation
Rental income is typically a major component of real estate returns. Some leases provide for inflation-linked rent increases. Moreover, rents can be raised when the lease term expires. In other words, rising inflation is accompanied by a more rapid increase in the regular income from real estate. This offers partial protection of the real return on the investment.
UBS is the only Swiss provider of ETFs on the SIX Swiss Exchange Real Estate indices. UBS SXI Real Estate ETFs offer investors easy and efficient access to the stability and growth potential of the Swiss real estate market.
Your benefits of investing in ETF real estate at a glance
- Efficient access to the stability and growth potential of Swiss real estate funds and shares
- Low costs: attractive price compared to some alternative physical real estate investments
- Transparency: full cost and portfolio transparency
- Diversification benefits for equity and bond portfolios
- Direct investment in real estate funds and shares underlying the indices, thus no counterparty risk from swap transactions
Make direct real estate investments
Undoubtedly, the most common form of real estate investment is ownership of residential property. However, residential properties account for only a small part of the real estate market. There are other forms of real estate investment, but these always demand substantial funds.
Make indirect real estate investments
By contrast, indirect real estate investments offer investors easier and more favorable access to the real estate market. Indirect real estate investments are investments in an exchange-traded real estate investment vehicle. For most private investors, indirect real estate investments are more cost effective, easier to manage and more accessible than direct investments.
Real estate ETFs combine the potential portfolio benefits of real estate investments, such as diversification and stability, with the overall advantages of ETFs, such as flexibility, liquidity and transparency. In addition, they offer greater diversification across sectors, regions and premiums..
Overview of indices
The Swiss real estate sector is tracked by three broad market indices. UBS offers ETFs on two of the indices, which they replicate:
- one on the overall SXI Real Estate® Index (contains listed real estate funds and shares)
- and one on the SXI Real Estate® Funds Index.
SXI Real Estate® Funds Index
The SXI Real Estate® Funds Index is made up exclusively of real estate funds listed on the SIX Swiss Exchange. The funds invest in real estate projects and assets. Accordingly, they offer investors indirect participation in the performance of real estate across a variety of sectors and regions.