Quantilia Index Spotlight: US REITs Shining in 2016

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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.


Note: Past performance is no guarantee of future results. The commentary above does not constitute investment advice, nor does it make any recommendations to buy or sell securities. Further, the accuracy of the data used cannot be guaranteed by Quantilia, an independent data platform. The data for each strategy on the Quantilia platform is provided by the relevant index provider. Quantilia does not promote any strategies or index providers and operates independently from financial institutions.