You realize what’s unlikely to get disrupted by synthetic intelligence? Actual property. Consulting corporations, software program builders, advertising and marketing companies, and even components of finance and regulation might really feel stress from automation and AI-driven productiveness.
However pipelines, residence buildings, energy grids, and telecom towers nonetheless have to exist. Folks nonetheless want locations to reside, electrical energy to energy their houses, and infrastructure to maneuver items and knowledge round.
We’ve already seen early indicators of rotation in 2026, with traders shifting again into vitality, industrials, and client staples. My focus is barely completely different.
I’m personally infrastructure and actual property — the bodily spine of the economic system. Listed here are two exchange-traded funds (ETFs) I discover compelling this 12 months.
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Canadian actual property
Canadian actual property has had a tough stretch. Workplace properties proceed to battle with hybrid work. Condominium costs in sure markets have softened. And plenty of particular person landlords are feeling the squeeze from excessive financing prices.
However that’s largely a leverage story. Many traders acquired into bother as a result of they borrowed closely. If rents don’t absolutely cowl mortgage funds, taxes, and upkeep, money movement turns adverse shortly.
That’s not an issue while you personal actual property funding trusts (REITs) by means of an ETF, particularly inside a registered account like a Tax-Free Financial savings Account (TFSA). My most well-liked automobile is BMO Equal Weight REITs Index ETF (TSX:ZRE).
ZRE holds roughly 20 Canadian REITs throughout retail, multifamily residential, industrial, healthcare, and workplace properties. The important thing function is equal weighting. Every REIT is capped at round 5% at rebalance. That forestalls one giant title from dominating the portfolio and enforces a disciplined buy-low, sell-high strategy over time.
Revenue is a serious function of REITs. Mixed in ZRE, the portfolio presently helps a 4.61% yield, paid month-to-month. That’s meaningfully increased than most broad-market fairness ETFs.
The trade-off is value. ZRE costs a 0.61% expense ratio, which is increased than plain-vanilla index ETFs. You’re paying for focused sector publicity and equal-weight development.
World infrastructure
A significant portion of the Canada Pension Plan’s portfolio is allotted to infrastructure. They favour it for a purpose. These are tangible property with regulated or contracted income streams that have a tendency to carry up throughout financial cycles.
As a retail investor, you possibly can’t straight make investments alongside CPP in non-public infrastructure. What you are able to do is acquire publicity by means of public markets. One accessible choice is BMO World Infrastructure Index ETF (TSX:ZGI).
ZGI tracks the Dow Jones Brookfield World Infrastructure North American Listed Index. To qualify, corporations should be listed in Canada or the U.S. and derive a minimum of 70% of their money movement from infrastructure-related actions corresponding to improvement, possession, leasing, or administration of infrastructure property.
The result’s a concentrated portfolio of about 50 vitality and utility corporations. That features oil and fuel storage and pipeline operators, electrical, fuel, and water utilities, telecom tower operators, and even choose airport and marine port corporations.
Infrastructure usually carries inflation sensitivity as a result of many contracts are listed to inflation or enable for regulated fee will increase. That was seen in 2022, when ZGI delivered a 4.77% return in a 12 months when each shares and bonds broadly declined.
The present yield is 2.45%, decrease than ZRE, however the whole return has been sturdy. Over the previous 5 years, ZGI has delivered an 11.91% annualized whole return with dividends reinvested.
Like ZRE, it carries a 0.61% expense ratio. It’s not low-cost, however it supplies focused publicity to a section of the market that’s tough to duplicate by yourself.
