RORE may be seen as a way to capture the income and growth potential of investing in U.S. REITs, and due to its alternative indexing methodology, the fund may produce improved risk-adjusted returns.
The REITs category has garnered greater attention in recent weeks after as the REITs sector formally became the 11th major industry segment of the S&P Dow Jones Indices in September. REITs, which make up about 3% of the S&P 50o’s market valuation, split away from the financial sector, becoming the newest sector under the Global Industry Classification Standard.
When the S&P Dow Jones Indices and MSCI announced they would create an independent real estate sector, J.P. Morgan projected that active equity funds were so underweight toward REITs that the new sector could cause $100 billion flows to the category. Since the newly minted sector would rival in size to utilities, telecoms and materials sectors, a number of fund managers who have not included REITs exposure may eventually bulk up on real estate.
For more information on new fund products, visit our new ETFs category.