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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) was launched on 12/02/2010, and is a smart beta exchange traded fund designed to offer broad exposure to the Real Estate ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 $212.63 million, which makes it one of the average sized ETFs in the Real Estate ETFs. Before fees and expenses, KBWY 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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.
The fund has a 12-month trailing dividend yield of 7.85%.
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.
This ETF has heaviest allocation in the Real Estate sector - about 100% of the portfolio.
Looking at individual holdings, Global Net Lease Inc (GNL - Free Report) accounts for about 8.02% of total assets, followed by Gladstone Commercial Corp (GOOD - Free Report) and Healthcare Realty Trust Inc (HR - Free Report) .
The top 10 holdings account for about 45.27% of total assets under management.
Performance and Risk
The ETF has added about 1.24% and it's up approximately 10.66% so far this year and in the past one year (as of 07/19/2024), respectively. KBWY has traded between $16.02 and $20.55 during this last 52-week period.
KBWY has a beta of 1.28 and standard deviation of 23.42% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco KBW Premium Yield Equity REIT ETF is not a suitable option for investors seeking to outperform the Real Estate ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $6.39 billion in assets, Schwab U.S. REIT ETF has $6.83 billion. XLRE has an expense ratio of 0.09% 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?
The Invesco KBW Premium Yield Equity REIT ETF (KBWY - Free Report) was launched on 12/02/2010, and is a smart beta exchange traded fund designed to offer broad exposure to the Real Estate ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 $212.63 million, which makes it one of the average sized ETFs in the Real Estate ETFs. Before fees and expenses, KBWY 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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.
The fund has a 12-month trailing dividend yield of 7.85%.
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.
This ETF has heaviest allocation in the Real Estate sector - about 100% of the portfolio.
Looking at individual holdings, Global Net Lease Inc (GNL - Free Report) accounts for about 8.02% of total assets, followed by Gladstone Commercial Corp (GOOD - Free Report) and Healthcare Realty Trust Inc (HR - Free Report) .
The top 10 holdings account for about 45.27% of total assets under management.
Performance and Risk
The ETF has added about 1.24% and it's up approximately 10.66% so far this year and in the past one year (as of 07/19/2024), respectively. KBWY has traded between $16.02 and $20.55 during this last 52-week period.
KBWY has a beta of 1.28 and standard deviation of 23.42% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco KBW Premium Yield Equity REIT ETF is not a suitable option for investors seeking to outperform the Real Estate ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $6.39 billion in assets, Schwab U.S. REIT ETF has $6.83 billion. XLRE has an expense ratio of 0.09% 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.