In recent years, the universe of real estate ETFs has morphed from prosaic to include more unique offerings, such as the Hoya Capital Housing ETF (HOMZ).
Hoya Capital Real Estate, a research-focused investment advisor specializing in real estate securities, launched HOMZ earlier this year, making it the first ETF to offer diversified exposure across the entire US housing sector. Following its April debut, HOMZ has been a star among domestic REIT ETFs, surging more than 16%.
More so than traditional real estate ETFs, HOMZ is levered to the residential real estate ecosystem. Home improvement companies and homebuilder-related ETFs could find support from homeowners who are willing to reinvest in their own homes. Additionally, the inverted yield curve doesn’t yet appear to be taking a toll on homebuilder equities.
“HOMZ is the first and only ETF that invests across the entire US Housing industry – investing across sector-lines to capture the entire housing sector in a single fund: homebuilders, rental operators, real estate technology, brokers, and housing services… 100 housing companies in all compared to the 30-50 stocks in other homebuilding-exclusive or residential REIT-exclusive funds,” said Hoya Capital’s Alex Pettee in a note to ETF Trends.
Looking Inside HOMZ
HOMZ tracks the Hoya Capital Housing 100 Index, a rules-based index composed of the 100 companies that collectively represent the performance of the US Housing Industry. According to Hoya Capital, the ETF is designed to track total spending on housing and housing-related services. The underlying index is composed of four US Housing Industry Business Segments, each weighted based on their relative contribution to US Gross Domestic Product.
Specifically, the Hoya Capital Housing ETF includes a 30% tilt toward residential REITs and real estate operators, 30% homebuilders, 20% home improvement retailers, and 20% mortgage lenders and services, which mirrors the percentage breakdown of GDP spending on the housing sector.
HOMZ features exposure to industries that usually aren’t found in traditional real estate ETFs, including mortgage and title companies, mobile home manufacturers, single-family rental operators, apartment firms and real estate technology providers.
“None of these six housing sector components within the HOMZ ETF are included in either XHB or ITB, highlighting the uniqueness of the new fund and the importance of capturing diversified exposure across the entire housing sector- both on the owner and renter side,” said Pettee.
For more information on the housing market, visit our homebuilders category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.