You realize what’s unlikely to get disrupted by synthetic intelligence? Actual property. Consulting corporations, software program builders, advertising companies, and even components of finance and legislation could really feel stress from automation and AI-driven productiveness.
However pipelines, residence buildings, energy grids, and telecom towers nonetheless must exist. Individuals nonetheless want locations to reside, electrical energy to energy their properties, and infrastructure to maneuver items and information round.
We’ve already seen early indicators of rotation in 2026, with buyers transferring again into power, industrials, and shopper staples. My focus is barely totally different.
I’m personally taking a look at infrastructure and actual property — the bodily spine of the economic system. Listed here are two exchange-traded funds (ETFs) I discover compelling this yr.
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Canadian actual property
Canadian actual property has had a tough stretch. Workplace properties proceed to wrestle with hybrid work. Rental costs in sure markets have softened. And lots of particular person landlords are feeling the squeeze from excessive financing prices.
However that’s largely a leverage story. Many buyers obtained into hassle as a result of they borrowed closely. If rents don’t totally cowl mortgage funds, taxes, and upkeep, money circulation turns damaging rapidly.
That’s not an issue whenever you personal actual property funding trusts (REITs) by an ETF, particularly inside a registered account like a Tax-Free Financial savings Account (TFSA). My most popular car 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 characteristic is equal weighting. Every REIT is capped at round 5% at rebalance. That stops one massive identify from dominating the portfolio and enforces a disciplined buy-low, sell-high method over time.
Revenue is a significant characteristic of REITs. Mixed in ZRE, the portfolio at present helps a 4.61% yield, paid month-to-month. That’s meaningfully greater than most broad-market fairness ETFs.
The trade-off is price. ZRE fees a 0.61% expense ratio, which is greater than plain-vanilla index ETFs. You’re paying for focused sector publicity and equal-weight building.
International infrastructure
A significant portion of the Canada Pension Plan’s portfolio is allotted to infrastructure. They favour it for a cause. 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 immediately make investments alongside CPP in non-public infrastructure. What you are able to do is acquire publicity by public markets. One accessible possibility is BMO International Infrastructure Index ETF (TSX:ZGI).
ZGI tracks the Dow Jones Brookfield International 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 circulation from infrastructure-related actions equivalent to growth, possession, leasing, or administration of infrastructure property.
The result’s a concentrated portfolio of about 50 power and utility corporations. That features oil and gasoline storage and pipeline operators, electrical, gasoline, and water utilities, telecom tower operators, and even choose airport and marine port corporations.
Infrastructure typically carries inflation sensitivity as a result of many contracts are listed to inflation or permit for regulated charge will increase. That was seen in 2022, when ZGI delivered a 4.77% return in a yr when each shares and bonds broadly declined.
The present yield is 2.45%, decrease than ZRE, however the whole return has been robust. 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 phase of the market that’s tough to copy by yourself.