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Is Invesco KBW Premium Yield Equity REIT ETF (KBWY) a Strong ETF Right Now?
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The Invesco KBW Premium Yield Equity REIT ETF (KBWY - Free Report) made its debut on 12/02/2010, and is a smart beta exchange traded fund that provides broad exposure to the Real Estate ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $340.66 million, making it one of the average sized ETFs in the Real Estate ETFs. Before fees and expenses, this particular fund seeks to match the performance of the KBW Nasdaq Premium Yield Equity REIT Index.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 5.80%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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.
Taking into account individual holdings, American Finance Trust Inc accounts for about 5.40% of the fund's total assets, followed by Global Net Lease Inc (GNL - Free Report) and Office Properties Income Trust (OPI - Free Report) .
KBWY's top 10 holdings account for about 44.19% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco KBW Premium Yield Equity REIT ETF has gained about 22.94% so far, and was up about 36.68% over the last 12 months (as of 10/13/2021). KBWY has traded between $16.20 and $24.35 in this past 52-week period.
The fund has a beta of 1.30 and standard deviation of 38.43% for the trailing three-year period, which makes KBWY a medium risk choice in this particular space. With about 30 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.
Schwab U.S. REIT ETF (SCHH - Free Report) tracks Dow Jones U.S. Select REIT Index and the iShares U.S. Real Estate ETF (IYR - Free Report) tracks Dow Jones U.S. Real Estate Index. Schwab U.S. REIT ETF has $6.34 billion in assets, iShares U.S. Real Estate ETF has $7.41 billion. SCHH has an expense ratio of 0.07% and IYR charges 0.41%.
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?
The Invesco KBW Premium Yield Equity REIT ETF (KBWY - Free Report) made its debut on 12/02/2010, and is a smart beta exchange traded fund that provides broad exposure to the Real Estate ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $340.66 million, making it one of the average sized ETFs in the Real Estate ETFs. Before fees and expenses, this particular fund seeks to match the performance of the KBW Nasdaq Premium Yield Equity REIT Index.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 5.80%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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.
Taking into account individual holdings, American Finance Trust Inc accounts for about 5.40% of the fund's total assets, followed by Global Net Lease Inc (GNL - Free Report) and Office Properties Income Trust (OPI - Free Report) .
KBWY's top 10 holdings account for about 44.19% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco KBW Premium Yield Equity REIT ETF has gained about 22.94% so far, and was up about 36.68% over the last 12 months (as of 10/13/2021). KBWY has traded between $16.20 and $24.35 in this past 52-week period.
The fund has a beta of 1.30 and standard deviation of 38.43% for the trailing three-year period, which makes KBWY a medium risk choice in this particular space. With about 30 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.
Schwab U.S. REIT ETF (SCHH - Free Report) tracks Dow Jones U.S. Select REIT Index and the iShares U.S. Real Estate ETF (IYR - Free Report) tracks Dow Jones U.S. Real Estate Index. Schwab U.S. REIT ETF has $6.34 billion in assets, iShares U.S. Real Estate ETF has $7.41 billion. SCHH has an expense ratio of 0.07% and IYR charges 0.41%.
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.