High-yielding, income-generating asset classes are benefiting this year as Treasury yields decline and the Federal Reserve puts off another interest rate increase. The group of beneficiaries includes exchange traded funds holding real estate investment trusts (REITs).
Within the REIT space, long-term investors may want to consider those ETFs with exposure to healthcare REITs, which are plays on the aging U.S. population. The Vanguard REIT ETF (NYSEArca: VNQ), SPDR Dow Jones REIT ETF (NYSEArca: RWR) and iShares Dow Jones US Real Estate Index Fund (NYSEArca: IYR) are among the most popular REIT ETF plays. While these are some of the top-performing sector funds this year another fund gives investors exposure to healthcare REITs.
That ETF is the newly minted Long-Term Care ETF (NasdaqGM: OLD), which debuted courtesy of Janus in June.
OLD tracks global companies that profit from providing long-term care to the aging populace, including those owning or operating senior living facilities, nursing services, specialty hospitals, and senior housing, biotech companies for age-related illnesses and companies that sell products and services to such facilities.
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As medical and pharmaceutical advancements prolong life expectancy, the aging population is expected to create increased demand for the long-term care industry. In 2050, the population age 65 and over in the U.S. is expected to be 83.7 million, or almost double its estimated population of 43.1 million 2012. About one in four 65-year-olds will live past 90 and one out of 10 will live past 95.
“So far, the fund has been off to a good start with a total return of 5.85%. Within the fund, 73.99% of holdings are concentrated in 10 companies. The largest holding is in Ventas Inc. (VTR) with a total weight of 21.55%. The second-largest holding is Welltower Inc. (HCN) at a weight of 20.49%. Investors looking for exposure to health care companies relating to the long-term care industry through a basket of health care REITs might want to take a look at this new fund,” according to Investopedia.
SEE MORE: Healthcare ETFs Could Be Second Half Rebound Ideas
The sudden spike in interest for REIT ETFs may be due to the pending GICS sector elevation of REITs as the REITs category remains underweighted in many actively managed mutual funds.
REITs may continue to experience a short-term boost in the months ahead as the S&P Dow Jones Indices stated it would add an 11th sector to its Global Industry Classification Standard, creating a new Real Estate Sector from the Financial Sector. The changes to the S&P 500 index will be implemented after the close of business on September 16, 2016.
For more information on healthcare ETFs, visit our Healthcare category.