JPMorgan Enters The REIT ETF Space

JPMorgan Chase & Co.'s JPM J.P. Morgan Asset Management, a unit that includes the bank's exchange traded funds business, introduced its first plain vanilla ETF Monday and entered the field of funds offering exposure to real estate investment trusts.

The JPMorgan BetaBuilders MSCI US REIT ETF BBRE debuted yesterday. The new ETF tracks the MSCI US REIT Index, one of the most widely followed REIT benchmarks.

What Happened

BBRE's underlying “index is based on the MSCI USA Investable Market Index, its parent index, which captures the large-, mid- and small-cap segments of the USA market,” according to a statement from New York-based J.P. Morgan Asset Management.

The index allocates over 27 percent of its weight to specialized REITs, 15.6 percent to retail REITs and 14 percent to residential REITs. Office and health care REITs combine for nearly 21 percent of the index's weight.

Why It's Important

While there are dozens of established REIT ETFs, the new BBRE is competitive on fees. BBRE's annual expense ratio is just 0.11 percent, or $11 on a $10,000 investment. That makes the new JPMorgan fund slightly less expensive than the Vanguard Real Estate ETF VNQ, the largest real estate ETF.

BBRE, which is home to 157 holdings, debuted with $50.73 million in assets.

“BBRE is a pure play on the REIT market and provides choice to investors who are seeking core real estate index exposure," Joanna Gallegos, U.S. head of ETFs at J.P. Morgan Asset Management, said in the statement.

What's Next

Real estate stocks and ETFs are often hindered by rising interest rates, and that is the environment the sector is operating in: the aforementioned VNQ is lower by nearly 5 percent year-to-date.

BBRE is the 25^th ETF in the J.P. Morgan Asset Management lineup. The firm has over $4 billion in combined ETF assets under management.

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Todd Shriber owns shares of VNQ.