REITs are securities that trade like a stock and invest in real estate directly through property ownership or mortgages. Consequently, revenue are mainly generated through rents or interest on mortgage loans. To qualify for special tax considerations, the asset also distributes the majority of income, about 90% of taxable profits, to investors as dividends, and receive at least 75% of that income from rents, mortgages and sales of property.
To be included in PFFR’s underlying index, components must be a prefrred security from a U.S. REIT with $75 million or more in market capitalization, an average monthly trading volume of 250,000 shares or more for 6 months and a yield to worst of 3% or more.
The fund will include REITs that involved in mortgage, office properties, hotels, healthcare, shopping centers and others.
Top holdings include VEREIT Inc 10.9%, WellTower Inc 10.1%, Alexandria Real Estate 6.2%, Felcor Lodging Trust 6.0% and National Retail Properties 5.3%.
As of December 31, 2016, the underlying index showed a 30-day SEC yield of 6.77% and an average yield-to-worst of 6.66%.
For more information on new fund products, visit our new ETFs category.