Hoya Capital Launches New Real Estate-Focused Exchange-Traded Fund

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Hoya Capital Real Estate, a research-focused registered investment advisor (RIA), is launching its second exchange-traded fund (ETF) focused on U.S. real estate investments, Commercial Observer can first report.

The Rowayton, Conn.-based firm is unveiling its Hoya Capital High Dividend Yield ETF (ticker symbol, RIET), which has exposure to 100 securities issued by real estate investment trusts and real estate operating companies. The fund will be traded on the New York Stock Exchange starting Wednesday and focus largely on the income side of the REIT sector, with dividend yield the primary factor in the investment selection process.

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The launch of RIET follows the debut of the RIA’s first fund, Hoya Capital Housing ETF (ticker HOMZ) two years ago, which recently surpassed $80 million in assets under management. ETF Express awarded it as the “Most Successful & Innovative ETF Launch” of 2019.

Alex Pettee, president and director of research and ETFs at Hoya Capital Real Estate, said the new fund’s selection process incorporates a screening process to identify REITs with lower leverage. Securities are selected primarily on dividend yield with a goal of diversification across a number of real estate asset classes.

“By taking this approach, RIET is able to achieve a yield that is more than twice that of the market cap-weighted averages, and doing so in a portfolio that doesn’t go ‘all-in’ on any single property sector or leave investors exposed to outsized idiosyncratic risks that you’d often find with more concentrated portfolios of high-yielding REITs,” Pettee said. “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.”

Pettee founded Hoya in 2015 after previously working as a REIT analyst. He earned master’s and bachelor’s degrees from Georgetown University, where he completed an independent study on REIT portfolio management.

The company’s roots stem from a semester-long independent study Pettee pursued at Georgetown on real estate portfolio management with Professor Jonathan Morris, a former executive at three publicly traded REITs. As part of his coursework, Pettee formed a mock asset management and equity research company referred to at the time as Hoya Investments Real Estate.

“RIET is particularly innovative because it achieves its premium yield not by going all-in on the riskier segments of the real estate sector, but rather by expanding and redefining the real estate investable universe,” said Morris, who founded the newly established REIT Academy. “The diligently researched index-selection process incorporates innovative exposure to both common and preferred stock, plus a thoughtful mix of equity and debt exposure to real income-producing assets through its holdings in companies across the broader REIT universe.”

Andrew Coen can be reached at acoen@commercialobserver.com.