Choosing the Right Factor in Smart Beta REIT ETFs

Hartford Funds is expanding its suite of Lattice exchange traded fund strategies to help investors enhance portfolios and diminish volatility or drawdown risks to potentially improve total risk-adjusted returns.

Hartford Funds recently came out with the Lattice Real Estate Strategy ETF (NYSEArca: RORE), a multi-factor, smart-beta ETF based on a combination of factors, like quality, momentum and value, that tries to deliver competitive yield and improved return potential in U.S. real estate investment trusts.

“This was a very timely effort. Demand for REITs are increasing as there’s an increased demand for diversified yield,” Darek Wojnar, Head of ETFs at Hartford Funds, told ETF Trends in a call.

SEE MORE: A New Smart-Beta REITs ETF to Capture a Growing Sector

Wojnar explained that RORE provides an attractive alternative to traditional market cap-weighted exposure, which may cause investors to be overweight the largest or most overvalued companies in the space. Alternatively, the smart-beta REITs ETF focuses on quality and momentum to provide a more diversified approach to the sector. The REIT ETF also minimizes exposure to holdings, so it is less top heavy with a 20% tilt toward the top 10 positions.