KBWY is an outsider in the US real estate space. The fund rejects the traditional cap-weighted methodology in favor of dividend yield-weighting. KBWY also intentionally nixes large cap REITs in favor of smaller capitalization alternatives. This produces a basket that tilts very small—70% small- and microcaps—and also underweights residential REITs in favor of commercial REITs. Still, KBWY’s dividend-focused strategy makes some sense: the reliable dividends of REITs are a big draw for real estate investors. KBWY’s yield currently looks strong next to our benchmark, but its yield advantage is unstable, in part because the fund’s long-term returns are more variable due to its small cap bias. Note too that the fund isn’t as liquid as IYR and VNQ, so it’s not for frequent or casual traders.
Roman78 (Roman) #1