Benzinga | Sep 22, 2021 11:48AM EDT

Hoya Capital Launches High Yield REIT ETF

Hoya Capital Real Estate is launching a brand new high-yield real estate investment trust ETF. The Hoya Capital High Dividend Yield ETF (NYSE:RIET) began trading Wednesday and provides investors with diversified exposure to roughly 100 of the highest yielding REITs in the market.

The Numbers: The RIET ETF currently has a dividend yield of 6.7% and distributions are paid monthly. The new ETF comes after Hoya launched the Hoya Capital Housing ETF (NYSE:HOMZ) in 2019, which has now grown to more than $80 million in assets under management.

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"RIET exclusively targets the income side of the real estate sector, making it the perfect complement to HOMZ, which seeks to invest in some of the fastest-growing real estate securities," Hoya Capital Director of Research Alex Pettee said in a statement.

Pettee takes a diversified approach to its allocation. Mid-cap REITs and small-cap REITS each have a 30% weighting in the index. "Dividend champions" and large-cap REITs each have a 15% weighting in the fund. The remaining 10% is preferred stock.

To reward early investors, Hoya is also waving fees through at least September 2022, bringing the fund's net expense ratio down from 0.5% to 0.25%.

How It Compares: Initial index holdings include Invesco Mortgage Capital Inc (NYSE:IVR), New York Mortgage Trust Inc (NASDAQ:NYMT) and Franklin Street Properties Corp. (NYSE:FSP).

The S&P 500 real estate sector has outperformed the overall market by a wide margin so far in 2021. However, the RIET ETF is positioned to generate a much higher yield than other popular REIT ETFs, which is an important factor for income investors in a historically low-rate environment.

The largest real estate ETF in the market by AUM is the Vanguard Real Estate Index Fund ETF (NYSE:VNQ), which has just a 3% dividend yield.

To learn more about the new RIET ETF, investors can read the fund's press release and prospectus on Hoya's website.