The Columbia Research Enhanced Real Estate ETF (NYSE:CRED) launched in April 2023 at exactly the wrong moment. Real estate had just entered a brutal bear market triggered by the Federal Reserve’s fastest rate hiking cycle in four decades. Since inception, CRED has delivered a negative 1.6% return while managing just $3.1 million in assets, creating liquidity concerns for anyone building a meaningful position. But the thesis for buying now isn’t about 2023 or 2024—it’s about what the Fed does next.
Rate Cuts Are the Catalyst Real Estate Needs
The real estate sector has been in a multi-year downturn, with the Vanguard Real Estate ETF (NYSE:VNQ) losing roughly 24% from its December 2021 peak through the end of 2025. When the Fed raised rates from near zero to over 5% starting in March 2022, it made borrowing expensive, compressed property valuations, and turned Treasury bonds into serious competition for REIT yields. That cycle is reversing. The Fed cut rates in December 2025, and forecasts from Goldman Sachs and Morningstar expect additional cuts in 2026, potentially bringing the fed funds rate down to 3% to 3.25% from the current 3.75% to 4%.
Lower rates reduce the cost of debt used to acquire and develop properties, push down Treasury yields to make REIT dividends more attractive, and lower the cap rates at which properties trade, boosting valuations. For CRED, which yields just over 4%, a falling rate environment makes that income stream more competitive. Investors should watch the monthly Consumer Price Index and Personal Consumption Expenditures reports released mid-month by the Bureau of Labor Statistics and Bureau of Economic Analysis. Each Fed meeting brings updated projections that will determine whether 2026 delivers the rate relief this sector needs.
CRED’s Infrastructure Tilt Is a Double-Edged Sword
CRED isn’t a generic REIT fund. According to Columbia’s fact sheet, the fund allocates roughly 28% to infrastructure REITs like cell towers and data centers, including top holdings American Tower, Equinix, and Digital Realty Trust. That’s double the exposure in the Vanguard Real Estate ETF, which has only about 14% in infrastructure. Infrastructure REITs are less sensitive to interest rate movements than traditional property types like apartments or retail. They generate steady cash flows from long-term leases with built-in escalators, insulating them from rate volatility.
This defensive positioning also limits upside when rates fall. Traditional REITs with higher leverage and more cyclical property exposure benefit more aggressively from easing cycles. CRED’s strategy uses Columbia’s proprietary quantitative research to filter out underperformers, but the fund has yet to prove that approach works. It underperformed VNQ by over 5% in 2025, and its tiny asset base suggests institutional investors aren’t convinced. Investors can track CRED’s holdings and sector shifts through Columbia’s quarterly fact sheets to see if the fund rotates toward higher-yielding property types as rates decline.
A Larger, Cheaper Alternative
For similar exposure without the liquidity risk, the Schwab U.S. REIT ETF (NYSE:SCHH) offers a comparable portfolio at just 0.07% in annual fees versus CRED’s 0.33%, and it distributes dividends monthly rather than quarterly. With $7 billion in assets, SCHH provides the scale and trading volume that CRED can’t match.
Conclusion
The most important factor for CRED in 2026 is whether the Fed delivers on expected rate cuts, and the key internal consideration is whether its infrastructure-heavy portfolio captures enough of the recovery to justify its underperformance and liquidity constraints.
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