Newcomer Hoya Capital Real Estate has launched its first ETF – the Hoya Capital Housing ETF (HOMZ US) – which delivers diversified exposure across the entire US housing sector.
The fund is designed to provide diversified exposure across the entire US housing sector.
Listed on NYSE Arca, the fund is linked to the Hoya Capital Housing 100 Index which screens the universe of US-listed stocks to identify and target those with significant business operations in one of four US housing segments.
The weight of each segment is allocated based on an approximation of its relative contribution to US Gross Domestic Product.
The segments and weights are: home ownership and rental operations, 30%; home building and construction, 30%; home improvement and furnishings, 20%; and home financing, technology, and services, 20%.
Stocks are assigned to sub-themes within each segment based on the percentage of firm revenues derived from that theme.
The index includes 100 stocks with a required number of constituents for each sub-theme. Sub-themes are assigned specific weights, and securities are equally weighted within each sub-theme.
For example, within the home building and construction segment, there are ten companies classified within the ‘homebuilders’ sub-theme with a weight of 1.5% each, and there are 20 companies classified within the ‘home building products and materials’ sub-theme with a weight of 0.75% each.
The index is reconstituted and rebalanced semi-annually in June and December.
Alex Pettee, President of Hoya Capital Real Estate, commented, “We believe HOMZ has the potential to be the new barometer for the performance of the US housing sector. By offering representative exposure to transformative sectors like real estate technology, we believe that HOMZ provides a modernized and highly intuitive evolution in the homebuilding and real estate categories.”
According to Hoya Capital, the fund was initially conceived as a way for the 100 million renters in America to gain access to an asset class that was previously out of reach, as well as a way for homeowners to diversify their concentrated housing-related exposure.
“With housing costs and rents continuing to rise, we think that HOMZ could be a core component of millions of household’s asset allocation,” said Pettee. “We think that financial advisors will potentially find this ETF to be a compelling solution for their clients who are impacted by rising rents and housing costs.”
Professor Jonathan Morris, Executive Vice President of Hoya Capital, believes the fund will also appeal to institutional investors looking for an efficient way to express a directional view on the US housing market or to hedge an existing exposure.
“Institutions hold trillions of dollars of housing-related assets and liabilities. By offering representative exposure to the US housing sector, we think HOMZ addresses a significant investment need for both institutions and individuals,” said Morris.
The ETF comes with an expense ratio of 0.45% and is expected to distribute dividends monthly.