ETF Spotlight on the First Trust S&P REIT Index Fund (NYSEArca: FRI), part of an ongoing series.
Assets: $325.2 million
Objective: The First Trust S&P REIT Index Fund tries to reflect the performance of the S&P United States REIT Index, which is comprised of real estate investment trusts, excluding mortgage, timber and prison ETFs.
Holdings: Top holdings include Simon Property Group (NYSE: SPG) 8.2%, Public Storage (NYSE: PSA) 3.9%, Equity Residential (NYSE: EQR) 3.8%, Health Care REIT (NYSE: HCN) 3.5% and Prologis (NYSE: PLD) 3.1%.
What You Should Know:
- First Trust sponsors the ETF.
- FRI has a 0.50% expense ratio.
- The ETF has 148 components and the top ten make up 37.5% of the overall portfolio.
- Sub-sector allocations include retail REITs 25.6%, residential REITs 16.2%, office REITs 13.8%, healthcare REITs 13.3%, diversified REITs 10.0%, specialized REITs 8.7%, hotel & resort REITs 7.9% and industrial REITs 4.6%.
- FRI is up 3.2% over the past month, up 6.0% over the past three months and up 28.5% year-to-date.
- The ETF is trading 8.4% above its 200-day exponential moving average.
- The fund touched a new all-time high Wednesday.
- FRI has a 1.91% 12-month yield.
- “REITs were traditionally viewed as a liquid way to buy commercial real estate and improve a portfolio’s diversification, but the sector’s investor base has expanded in recent years to include income and growth seekers,” according to Abby Woodham for Morningstar.
- “The risk of rising interest rates is the biggest risk to the REIT sector,” Woodham added. “Because REITs must pay out most of their income as dividends, they rely on debt for growth. For REITs, higher rates mean more-expensive debt servicing and less business reinvestment.”
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