Hoya Capital Launches High Yield REIT ETF

Hoya Capital Real Estate is launching a brand new high-yield real estate investment trust ETF. The Hoya Capital High Dividend Yield ETF RIET began trading Wednesday and provides investors with diversified exposure to roughly 100 of the highest yielding REITs in the market.

The Numbers: The RIET ETF currently has a dividend yield of 6.7% and distributions are paid monthly. The new ETF comes after Hoya launched the Hoya Capital Housing ETF HOMZ in 2019, which has now grown to more than $80 million in assets under management.

Related Link: Why Zillow Stock Is Down 20% In 2021 In The Middle Of A Housing Boom

“RIET exclusively targets the income side of the real estate sector, making it the perfect complement to HOMZ, which seeks to invest in some of the fastest-growing real estate securities,” Hoya Capital Director of Research Alex Pettee said in a statement.

Pettee takes a diversified approach to its allocation. Mid-cap REITs and small-cap REITS each have a 30% weighting in the index. “Dividend champions” and large-cap REITs each have a 15% weighting in the fund. The remaining 10% is preferred stock.

To reward early investors, Hoya is also waving fees through at least September 2022, bringing the fund’s net expense ratio down from 0.5% to 0.25%.

How It Compares: Initial index holdings include Invesco Mortgage Capital Inc IVR, New York Mortgage Trust Inc NYMT and Franklin Street Properties Corp. FSP.

The S&P 500 real estate sector has outperformed the overall market by a wide margin so far in 2021. However, the RIET ETF is positioned to generate a much higher yield than other popular REIT ETFs, which is an important factor for income investors in a historically low-rate environment.

The largest real estate ETF in the market by AUM is the Vanguard Real Estate Index Fund ETF VNQ, which has just a 3% dividend yield.

To learn more about the new RIET ETF, investors can read the fund’s press release and prospectus on Hoya’s website.