IndexIQ’s IQ US Real Estate ETF celebrates third anniversary
The IQ US Real Estate Small Cap ETF (ROOF), the first exchange-traded fund to provide exposure to the overall performance of small capitalisation US real estate companies, celebrated its third anniversary on 14 June.
“Small-capitalisation REITs historically have offered investors the opportunity for higher yields and less correlated performance,” says Adam Patti, chief executive officer at IndexIQ. “Those factors were among our reasons for developing ROOF and its underlying index, and we have been very pleased with the way the fund has performed.”
ROOF seeks to replicate, before fees and expenses, the performance of the IQ US Real Estate Small Cap Index, a float-adjusted, market-cap weighted index that seeks to track the overall performance of small-capitalisation US real estate companies.
As of 31 March, the top three sector allocations in the fund and index were mortgage REITs (approximately 23 per cent of holdings), office REITs (approximately 18 per cent), and specialised REITs (approximately 14 per cent). The fund and index also offer exposure to hotel REITs, diversified REITs, retail REITs and residential REITs.
“Small-cap REITs can serve as an effective complement to investors’ large-cap REIT exposure,” says Patti. “Not only do they offer the potential for outperformance, but in many cases these REITs also become acquisition targets in their own right, further benefiting shareholders.”
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