You know what’s unlikely to be disrupted by artificial intelligence? Real assets. Consulting firms, software developers, marketing agencies and even parts of the financial and legal industries may feel pressure from automation and AI-driven productivity.
But pipelines, apartment buildings, power grids and telecommunications towers still need to exist. People still need places to live, electricity to power their homes, and infrastructure to move goods and data.
We have already seen the first signs of rotation in 2026, with investors returning to the energy, industrial and consumer goods sectors. My focus is slightly different.
Personally, I look at infrastructure and real estate – the physical backbone of the economy. Here are two exchange-traded funds (ETFs) that I find attractive this year.
Canadian real estate
Canadian real estate has gone through a difficult period. Office buildings continue to struggle with hybrid work. Apartment prices in certain markets have softened. And many individual landlords are feeling the pressure of high financing costs.
But that is largely a leverage story. Many investors got into trouble because they borrowed heavily. If rents do not fully cover mortgage payments, taxes and alimony, cash flow quickly becomes negative.
That’s not a problem if you own real estate investment trusts (REITs) through an ETF, especially in a registered account like a tax-free savings account (TFSA). My vehicle of choice is BMO Equal Weight REITs Index ETF (TSX: ZRE).
ZRE owns approximately 20 Canadian REITs in retail, multi-family, industrial, healthcare and office properties. The most important feature is equal weighting. Each REIT has a cap of approximately 5% upon rebalancing. That prevents one big name from dominating the portfolio and enforces a disciplined buy-low, sell-high approach over time.
Income is an important characteristic of REITs. Combined into ZRE, the portfolio currently supports a yield of 4.61%, paid monthly. That’s significantly higher than most broad market equity ETFs.
The trade-off is cost. ZRE has an expense ratio of 0.61%, which is higher than regular index ETFs. You pay for targeted sector exposure and an equivalent construction.
Global infrastructure
A large portion of the Canada Pension Plan portfolio is dedicated to infrastructure. They favor it for a reason. These are tangible assets with regulated or contracted income streams that tend to persist across economic cycles.
As a retail investor you cannot invest in private infrastructure directly in addition to CPP. What you can do is gain exposure through public markets. An accessible option is BMO Global Infrastructure Index ETF (TSX:ZGI).
ZGI tracks the Dow Jones Brookfield Global Infrastructure North American Listed Index. To qualify, companies must be listed in Canada or the US and derive at least 70% of their cash flow from infrastructure-related activities such as the development, ownership, leasing or management of infrastructure assets.
The result is a concentrated portfolio of approximately 50 energy and utility companies. That includes oil and gas storage and pipeline operators, electricity, gas and water utilities, telecommunications tower operators and even select airport and seaport companies.
Infrastructure is often inflation-sensitive because many contracts are indexed to inflation or allow regulated rate increases. That was visible in 2022, when ZGI returned 4.77% in a year when both stocks and bonds broadly fell.
The current yield is 2.45%, lower than ZRE, but the total return is strong. Over the past five years, ZGI has delivered an annualized total return of 11.91%, with dividends reinvested.
Like ZRE, it has an expense ratio of 0.61%. It’s not cheap, but it provides targeted exposure to a segment of the market that is difficult to replicate on your own.
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