One distinction that VanEck believes could be worth monitoring is real assets. 

Real assets are physical, tangible investments such as property and infrastructure. These derive value from their use and often generate income. 

These differ from other investment classes like bonds, which represent contractual claims on value rather than ownership of physical goods.

A new report from VanEck has shed light on why ASX ETFs focused on physical assets could be worth considering. 

Infrastructure and listed property

Two examples of physical assets that VanEck points to are infrastructure and physical property. 

VanEck explained that global real estate includes investment opportunities not readily available in Australia, including student housing developments, storage, data warehouses, and hotels. 

Often, rental income is linked to inflation, so it tends to increase with CPI. Australians have had a long affinity with property investing, and the requirement for income is a key driver of its demand.

Investors have also come to recognise that infrastructure assets tend to be linked to steady and reliable income, supported by real assets that tend to be long-lived and that generally retain their value.

One example of this is ASX-listed toll operator Transurban Group (ASX: TCL). 

Generally, road tolls increase in line with changes in the Consumer Price Index. Government regulation determines the amount and the frequency of toll price increases each year. And despite these rises, these roads still have traffic jams.

This highlights one of the key drivers of the long-term performance of global infrastructure securities: they exhibit inelastic demand for the services they offer.

VanEck said that with many investors predicting a high inflation and low growth, a stagflationary environment, infrastructure is piquing investor interest.  

In the past global listed infrastructure has outperformed global equities during recent stagflationary environments, when US inflation was above 2.5%, and US real GDP Growth was below 2.5%, in 3 out of the last 4 periods.

How to gain exposure with ASX ETFs

VanEck has identified two ASX ETFs that offer exposure to these real assets. 

Firstly, the VanEck FTSE Global Infrastructure (AUD Hedged) ETF (ASX: IFRA). 

The fund gives exposure to listed infrastructure companies across developed markets. The underlying index framework is designed around infrastructure sub-sectors, with target exposures of roughly 50% to utilities, 30% to transportation, and 20% to other infrastructure. 

In practice, that means investors are buying into assets such as regulated utilities, toll roads, airports, pipelines, towers and related essential-service businesses. That is a compelling setup when markets are rewarding resilient cashflows and businesses with pricing power or long-duration demand.

The second fund to consider is the VanEck FTSE International Property (AUD Hedged) ETF (ASX: REIT). 

It gives investors exposure to roughly 300 international property securities/REITs across countries and sectors that are not easily accessible through the local market. 

We think the bullish case is that elevated cash yields, stable income demand, a recovering property sector and ongoing infrastructure investment keep supporting listed real assets. 

The main risks are a renewed rise in long bond yields, slower-than-expected rate cuts, and sector-specific weakness in parts of the property or infrastructure markets.

The post Why now is the perfect time to target real assets with these ASX ETFs appeared first on The Motley Fool Australia.

In fact, new data from the Australian Bureau of Statistics revealed the national mean price of residential dwellings recently passed $1 million.

The real estate sector is made up of two industries:

• Equity Real Estate Investment Trusts (REITs) industry covering companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of property.

• Real Estate Management & Development industry covering companies engaged in activities including development & sales, management or real estate services.

The S&P/ASX 200 REAL ESTATE (ASX:XRE) index has seen modest growth this year, rising 4.92%. 

If you are interested in gaining exposure to the real estate sector, especially with interest rates expected to fall, here are some options that could have a strong upside. 

Goodman Group (ASX: GMG)

Goodman Group is a global industrial property specialising in digital infrastructure, logistics and data centre developments across major urban markets.

It is the largest ASX Real Estate company on the ASX by market capitalisation. 

The GMG share price is down 4.14% YTD. 

With further interest rate cuts expected, it could be an opportune time to buy real estate shares like Goodman Group. 

Interest rate cuts could benefit Goodman Group by lowering borrowing costs, boosting property valuations, and attracting more investors to income-generating assets.

Cuts to interest rates also support tenant demand by encouraging expansion from logistics and data centre clients, enhancing occupancy and development opportunities.

It seems brokers agree it could be a good time to buy GMG shares. 

Broker Bell Potter has a target price of $38.27, indicating 10.8% upside. 

Dylan Evans from Catapult Wealth also recently listed Goodman Group shares as a buy. 

Lendlease Group (ASX: LLC)

Another ASX REIT stock to consider is Lendlease Group. 

It is a property and infrastructure development company. It engages in designing, developing, constructing, funding, owning, co-investing or managing property and infrastructure assets.

So far in 2025 its share price has fallen 11.22%. 

Brokers seem to think this is significantly undervalued. 

Earlier this month Macquarie placed an outperform rating and $7.79 price target on its shares.

Bell Potter has a price target of $7.12. 

From its current share price of $5.54, these price targets indicate an upside between 28.5% to almost 40%. 

VanEck Ftse International Property (Hedged) ETF (ASX: REIT)

Another option for investors looking to gain exposure to real estate stocks is through a thematic ETF. 

The VanEck Ftse International Property (Hedged) ETF (ASX: REIT) ETF includes approximately 300 international REITs diversified by country and sector. 

It provides exposure to commercial, healthcare, retail, office, industrial and other sectors not available in Australia.

It is almost flat YTD, and is down 4.96% over the last 5 years. 

The post Solid foundations: Is there opportunity in these real estate stocks? appeared first on The Motley Fool Australia.

When interest rates rise, property prices are expected to decline. However, this relationship only factors in the demand side of the equation. House prices are also impacted by the supply of homes on the market. Over the past few years, the housing supply has significantly declined. A major cause has been a reduced level of turnover (i.e. longer home ownership). 

The proportion of housing stock currently being transacted is roughly equivalent to the height of the 1990s recession, when interest rates were through the roof and unemployment was highest since the Great Depression. According to news.com.au, housing turnover was 4.6% in 2024, significantly down from the 2001 peak of 9.1%

Other factors that have limited housing supply over the past few years include strong immigration following the reopening of borders after COVID-19 and the impact of short-term rentals.

Unfortunately for aspiring property buyers, Australia's major property markets have become severely unaffordable. According to the Australian Institute, the size of the average home loan over the past 5 years has increased by more than $198,000 in Western Australia, South Australia, Queensland, and New South Wales. 

While media commentary has focused on Sydney being the most expensive city in the world, all states have been affected. For example, according to the Australian Institute, the average new home loan in South Australia has increased 56% over the past five years from $372,000 to $580,000. Meanwhile, the average full-time wage in South Australia has only increased by 18%.

The benefits of ASX ETF investing

With the housing shortage likely to continue, the outlook for owner-occupiers is likely to remain challenging. Fortunately, listed property, and in particular, ASX ETFs, provide several key advantages over direct real estate ownership. 

The secular decline in brokerage fees means that investors can regularly make small contributions to build up their property exposure. This is a huge advantage over direct ownership, given the typical requirement for a 20% deposit for a property purchase. 

ETFs also offer diversification within the property sector, including commercial property such as shopping malls, offices, warehousing, and healthcare clinics. By nature of being listed on the exchange, they offer liquidity. This allows investors to sell a portion of their investment at a very low cost compared to the fees charged by real estate agents.

Real estate ASX ETFs to consider

If you're interested in real estate exchange-traded funds (ETFs), there are several options available on the ASX.

The Vanguard Australian Properties Securities Index ETF (ASX: VAP) provides low-cost exposure to a mix of Australian real estate investment trusts (A-REITS). The VAP ETF contains 31 holdings from a range of property sectors, including residential, office, retail, and industrial. With a management expense ratio of just 0.23%, this ETF is an especially low-cost option. 

The VanEck Australian Property ETF (ASX: MVA) is another option to consider. For a management expense of 0.35%, the MVA ETF contains 17 holdings and seeks to track the MVIS Australia A-REIT Index. 

Finally, Australian investors looking for property exposure may wish to consider the VanEck FTSE International Property (Hedged) ETF (ASX: REIT). With 318 holdings, this ASX ETF is significantly more diversified than the VAP ETF and the MVA ETF. For a management expense of 0.20%, it invests in international property securities outside Australia with returns hedged into Australian dollars. This ETF is best suited for those looking to maximise diversification.

The post The advantages of ASX ETFs for real estate investing appeared first on The Motley Fool Australia.

S&P/ASX 200 Index (ASX: XJO) shares rose 7.83%, for total returns of 12.1% including dividends.

Meantime, the national median property value, which reflects all types of property in a single data point, rose by 8% with total returns of 12.2% after rental income is factored in, according to CoreLogic data.

But a combination of the two in the form of ASX property exchange-traded funds (ETFs) delivered far greater returns in FY24.

Shares vs. property: 2 ASX property ETFs outperform

There are three Australian property ETFs and three global property ETFs listed on the ASX.

The ASX recently published total returns data for all ASX shares, ASX ETFs, listed managed funds and listed investment companies (LICs) in FY24.

The two top-performing ASX property ETFs simply smashed it out of the park with above 20% gains.

SPDR S&P/ASX 200 Listed Property (ASX: SLF)

This ASX property ETF delivered total returns of 24.35% in FY24.

The SLF ETF tracks the returns of the S&P/ASX 200 A-REIT Index (ASX: XPJ) before fees and expenses.

State Street says the ETF is a low-cost way of investing in ASX property shares. The management expense ratio (MER) was 0.4% in FY24 (reduced to 0.16% from 1 July 2024).

The SLF ETF exposes investors to all types of global property, including retail, office, industrial and diversified. Its biggest position today is Goodman Group (ASX: GMG) at 39.98%.

Goodman was the best-performing stock in its market sector in FY24, with an astounding 73.1% share price gain. This was largely due to the excitement surrounding artificial intelligence (AI), with Goodman leveraging its industrial property expertise to build, convert, and acquire more data centres worldwide.

The ETF's second-biggest position today is Scentre Group (ASX: SCG) shares, with an 11.66% holding. The Scentre share price rose by 17.74% in FY24 as the company benefitted from several retail sector tailwinds.

Goodman and Scentre shares make up about half the value of the SLF ETF.

Their share price gains of 73.1% and 17.74%, respectively, help explain why the SLF ETF delivered better total returns at 24.35% vs. physical residential property, which delivered 12.2% total returns.

Vanguard Australian Property Securities Index ETF (ASX: VAP)

This ASX property ETF delivered total returns of 23.44% in FY24 — only slightly less than the SLF ETF.

The main difference between the two ASX ETFs is the VAP ETF tracks the return of the S&P/ASX 300 A-REIT Index before fees, costs and taxes. So, it incorporates the performance of 100 more ASX property shares and REITs than the SLF ETF. The MER is 0.23%.

Today, the VAP ETF's biggest holdings are the same as the SLF ETF, with Goodman shares representing 39.66% and Scentre shares 10.7%.

Here's how the other 4 ASX property ETFs did in FY24

• The VanEck Australian Property ETF (ASX: MVA) delivered 7.31% total returns
• The SPDR Dow Jones Global Real Estate ESG ETF (ASX: DJRE) delivered 4.66% total returns
• The iShares Core FTSE Global Property Ex Au (AUDH) ETF (ASX: GLPR) delivered 4.12% total returns
• The VanEck FTSE International Property (Hedged) ETF (ASX: REIT) delivered 2.35% total returns.

Here's how home values across Australia changed in FY24

Here is a further breakdown of how home values changed across the city and regions in FY24.

A key factor in the performance variance is the strongest markets had tight supply and demand. The impact of this was so significant that it trumped the usual dampening effect of higher interest rates.

Foolish takeaway on shares vs. property

Choosing between shares vs. property is a classic investor's dilemma. If you have enough time on your side, many people would say you should simply buy both.

Could ASX property ETFs be another way of doing so? In a way, yes.

But it's worth noting that very few ASX property shares or REITs have direct exposure to the residential market. And you obviously can't live in them or add value to them through renovations.

So, if you want exposure to the residential market, you'll have to go 'old school' and buy a bricks-and-mortar investment.

The post Shares vs. property: These 2 ASX property ETFs delivered 20%-plus returns in FY24 appeared first on The Motley Fool Australia.