Switching up its lineup of smart beta and alternative ETF strategies it is known for, J.P. Morgan Asset Management launched a plain-vanilla real estate investment strategy in what could be part of its new suite of “BetaBuilders.”
On Monday, J.P. Morgan rolled out the JPMorgan BetaBuilders MSCI U.S. REIT ETF (Cboe: BBRE), which has a 0.11% expense ratio.
Unlike J.P. Morgan’s other ETFs that are known for their customized indices that follow smart-beta equity factors and alternative investment strategies reminiscent of hedge fund investments, BBRE follows a traditional market capitalization-weighted indexing methodology.
“Beta is a measure of the volatility of a security or a portfolio relative to a market benchmark,” according to J.P. Morgan. “The term ‘BetaBuilders’ in the Fund’s name conveys the intended outcome of providing investors with passive exposure and return that generally correspond to a market cap weighted benchmark.”
The MSCI US REIT Index
BBRE will try to reflect the performance of the MSCI US REIT Index, a free-float adjusted market-cap weighted index designed to measure the performance of mid- and small-cap US equity real estate investment trust securities.
The underlying portfolio may include exposure to Health Care REITs, Hotel & Resort REITs, Industrial REITs, Office REITs, Residential REITs, Retail REITs, Diversified REITs and certain Specialized REITs. Specialized REITs include storage and self-storage facilities, data centers, correctional facilities, theaters, casinos and gaming facilities or restaurants, according to the fund’s prospectus.
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Top holdings include Simon Property Group 6.3%, Prologis Inc 4.1%, Public Storage REIT 4.0%, Equinix Inc REIT 3.8% and Equity Residential REIT 2.8%.
“BBRE is a pure play on the REIT market and provides choice to investors who are seeking core real estate index exposure,” Joanna Gallegos, U.S. head of ETFs at J.P. Morgan Asset Management, said in a note. “Additionally, for allocators, REITs can provide diversification benefits to traditional equity and fixed income portfolios.”
For more information on new fund products, visit our new ETFs category.