4. JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE)
5-Year Share Price Performance as of March 29: 4.78%
JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE) offers exposure to the US equity REIT market through an indexed approach. Its underlying index tracks the performance of US equity REIT securities, focusing mainly on small and mid-cap companies. The fund employs a passive investment strategy. JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE) was launched on June 15, 2018. As of March 28, 2024, the ETF has net assets of $818.08 million, with a portfolio of 119 stocks and an expense ratio of 0.11%.
Digital Realty Trust, Inc. (NYSE:DLR) is one of the largest holdings of JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE). Digital Realty Trust, Inc. (NYSE:DLR) specializes in uniting companies and data through a comprehensive range of data center, colocation, and interconnection solutions. On February 29, Citi initiated a Positive Catalyst Watch for Digital Realty Trust, Inc. (NYSE:DLR) due to expected favorable demand for hyperscale leasing, which is anticipated to strengthen bookings and core metrics. The price target was raised to $160 from $154, while Citi maintained a Buy rating for DLR.
According to Insider Monkey’s fourth quarter database, 35 hedge funds were bullish on Digital Realty Trust, Inc. (NYSE:DLR), compared to 27 funds in the last quarter.
Baron Real Estate Fund stated the following regarding Digital Realty Trust, Inc. (NYSE:DLR) in its fourth quarter 2023 investor letter:
“Following strong share performance, we trimmed our large investment in data center REIT Digital Realty Trust, Inc. (NYSE:DLR). We remain optimistic about the long-term potential for the company.
Data center landlords such as Digital Realty (and Equinix, Inc.) are benefiting from record low vacancy, demand outpacing supply, more constrained power availability, and rising rental rates. Several secular demand vectors, which are currently broadening, are contributing to robust fundamentals for data center space globally. They include the outsourcing of information technology infrastructure, increased cloud computing adoption, the ongoing growth in mobile data and internet traffic, and artificial intelligence as a new wave of data center demand.
In the last few months, we have also spent time with CEO Andy Power of Digital Realty. Over the last few years, Andy and Digital Realty’s management team have been undergoing a business transformation, which accelerated after its acquisition of Interxion in March 2020, a pure-play European network-dense data center operator. The company has been shedding non-core slower-growth assets, investing and expanding in Europe, growing its retail colocation business, improving its balance sheet, and adding operational expertise by supplementing new management leadership. We have spent a significant amount of time with Andy over the years and believe the investments the company has made are on the cusp of bearing fruit and will pay dividends for years to come. In addition, we believe the fundamentals in its core business are at an inflection point with robust demand/bookings, pricing power, hyperscale cloud players outsourcing a higher percentage of their digital infrastructure needs and limited competitive capacity. We believe these factors will lead to growth in the core business in the next few years and are optimistic about the long-term prospects for the company.”
