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Is Invesco KBW Premium Yield Equity REIT ETF (KBWY) a Strong ETF Right Now?
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Launched on 12/02/2010, the Invesco KBW Premium Yield Equity REIT ETF (KBWY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Real Estate ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
KBWY is managed by Invesco, and this fund has amassed over $201.72 million, which makes it one of the average sized ETFs in the Real Estate ETFs. KBWY seeks to match the performance of the KBW Nasdaq Premium Yield Equity REIT Index before fees and expenses.
The KBW Nasdaq Premium Yield Equity REIT Index is a dividend weighted index seeking to reflect the performance of approximately 24 to 40 small- and mid-cap equity REITs in the US.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for KBWY are 0.35%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 9.03%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Real Estate sector.
When you look at individual holdings, Brandywine Realty Trust (BDN - Free Report) accounts for about 6.24% of the fund's total assets, followed by Global Net Lease Inc (GNL - Free Report) and Sabra Health Care Reit Inc (SBRA - Free Report) .
The top 10 holdings account for about 46.43% of total assets under management.
Performance and Risk
The ETF has lost about -3.86% and is down about -1.02% so far this year and in the past one year (as of 10/18/2023), respectively. KBWY has traded between $16.18 and $22.68 during this last 52-week period.
The ETF has a beta of 1.26 and standard deviation of 24.04% for the trailing three-year period, making it a medium risk choice in the space. With about 29 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco KBW Premium Yield Equity REIT ETF is a reasonable option for investors seeking to outperform the Real Estate ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Real Estate Select Sector SPDR ETF (XLRE - Free Report) tracks Real Estate Select Sector Index and the Schwab U.S. REIT ETF (SCHH - Free Report) tracks Dow Jones U.S. Select REIT Index. Real Estate Select Sector SPDR ETF has $4.21 billion in assets, Schwab U.S. REIT ETF has $5.67 billion. XLRE has an expense ratio of 0.10% and SCHH charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Real Estate ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is Invesco KBW Premium Yield Equity REIT ETF (KBWY) a Strong ETF Right Now?
Launched on 12/02/2010, the Invesco KBW Premium Yield Equity REIT ETF (KBWY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Real Estate ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
KBWY is managed by Invesco, and this fund has amassed over $201.72 million, which makes it one of the average sized ETFs in the Real Estate ETFs. KBWY seeks to match the performance of the KBW Nasdaq Premium Yield Equity REIT Index before fees and expenses.
The KBW Nasdaq Premium Yield Equity REIT Index is a dividend weighted index seeking to reflect the performance of approximately 24 to 40 small- and mid-cap equity REITs in the US.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for KBWY are 0.35%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 9.03%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Real Estate sector.
When you look at individual holdings, Brandywine Realty Trust (BDN - Free Report) accounts for about 6.24% of the fund's total assets, followed by Global Net Lease Inc (GNL - Free Report) and Sabra Health Care Reit Inc (SBRA - Free Report) .
The top 10 holdings account for about 46.43% of total assets under management.
Performance and Risk
The ETF has lost about -3.86% and is down about -1.02% so far this year and in the past one year (as of 10/18/2023), respectively. KBWY has traded between $16.18 and $22.68 during this last 52-week period.
The ETF has a beta of 1.26 and standard deviation of 24.04% for the trailing three-year period, making it a medium risk choice in the space. With about 29 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco KBW Premium Yield Equity REIT ETF is a reasonable option for investors seeking to outperform the Real Estate ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Real Estate Select Sector SPDR ETF (XLRE - Free Report) tracks Real Estate Select Sector Index and the Schwab U.S. REIT ETF (SCHH - Free Report) tracks Dow Jones U.S. Select REIT Index. Real Estate Select Sector SPDR ETF has $4.21 billion in assets, Schwab U.S. REIT ETF has $5.67 billion. XLRE has an expense ratio of 0.10% and SCHH charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Real Estate ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.