In a survey of investment professionals conducted in March 2008, 67 percent called Exchange Traded Funds (ETFs) the most innovative investment vehicle of the last two decades, and 60 percent reported that ETFs have fundamentally changed the way they construct investment portfolios. Yet in real estate, ETFs still account for a relatively small share of the investment universe. Ed McRedmond, senior vice president of portfolio strategies with Invesco PowerShares, spoke recently with The Institutional Real Estate Letter – North America about the evolution of ETFs and why institutional investors might want to give them a second look.

ETFs have traditionally been index funds, but in 2008 the U.S. Securities and Exchange Commission began to authorize the creation of actively managed ETFs such as the PowerShares Active U.S. Real Estate Fund (NYSE: PSR). What does it mean to be an actively managed ETF, and how have ETFs evolved to the products they are today?

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