Nuveen launches US short-term REIT ETF

Dec 22nd, 2016 | By | Category: Alternatives / Multi-Asset

Nuveen, an operating division of TIAA Global Asset Management, has launched the NuShares Short-Term REIT ETF (Bats: NURE), offering exposure to US-listed real estate investment trusts (REITs) with operations typically involving shorter lease durations.

Nuveen launches US short-term REIT ETF

REIT ETFs may suit income-seeking investors as, by law, US-based REITs are required to maintain dividend pay-out ratios in excess of 90%.

The fund tracks the Dow Jones US Select Short-Term REIT Index. As of 30 November 2016 the index is composed of 37 REITs with the largest allocation to REITs managing apartment buildings at 49.9%, followed by those managing hotels at 25.3%, self-storage facilities at 16.3% and manufactured home properties at 8.5%. REITs investing in these properties typically have shorter lease durations than REITs investing in other properties.

REITs are weighted by market capitalization, subject to a 5% maximum weight per constituent, with a quarterly rebalancing schedule. The index is up 2.1% year-to-date as of 30 November 2016.

Martin Kremenstein, Managing Director and Head of Exchange-Traded Funds at Nuveen, commented: “As short-term REITS have historically outperformed the broad US listed REIT universe in times of rising interest rates, we are pleased to offer investors exposure that is unique to the ETF marketplace.”

The fund may be a suitable solution for income-seeking investors due to the high dividend yields inherent in REITs; by law US-based REITs are required to maintain dividend pay-out ratios in excess of 90%.

It may also serve as an effective risk management tool due to the tendency for real assets such as property to perform relatively well during periods of market stress.

The ETF’s total expense ratio is 0.35%.

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