The PowerShares KBW Premium Yield Equity REIT Portfolio has gained 29.2% year to date, amid a global search for yield in the low interest rate environment.
In comparison, the Dow Jones US Real Estate Index has risen 9.7% YTD, while the S&P 500 Index has added 6.8%. Quantilia’s non-investable Beta Equity Yield US benchmark has gained 15.9% YTD.
The Invesco PowerShares index is a top performing equity yield strategy on the Quantilia platform YTD.
The fund, which is based on the KBW Nasdaq Premium Yield Equity REIT Index, is dividend-weighted – meaning higher yielding assets are given bigger weightings.
It currently tracks the performance of 29 high-yielding small- and mid-cap US equity REITs, and is rebalanced annually.
CBL & Associates Properties Inc, which has the highest weighting in the fund of 5.8%, has a dividend yield of 8.3%.
The US REIT market
Listed property funds in the US are benefiting from historically low yields on the US 10-year Treasury. 10-Year Treasury yields have been squeezed to below 1.6% as investors look for safe and quality assets, particularly in the wake of the Brexit vote, which has added to global market uncertainty.
As a result, US REITs (real estate investment trusts) offer attractive yields relative to bonds. REITs are also garnering more attention because they will be reclassified into a new headline sector by S&P Dow Jones Indices and MSCI, effective from the end of August.
Important to note is that the rally of small- and mid-cap US REITs so far in 2016 follows a period of relative underperformance against large REITs.
