KBWY: Small-Cap REIT ETF Has Attractive Yield

KBWY: Small-Cap REIT ETF Has Attractive Yield

A Seeking Alpha Contribution


  • FRI offers similar exposure to VNQ, but at five times the cost.
  • Small-cap KBWY delivers a full percentage point more in yield.
  • KBWY has outperformed large-cap REITs when interest rates increased in the past.

There are two more ETFs to cover on the domestic side. The first is the First Trust S&P REIT Index ETF (NYSEARCA:FRI). This one of the smaller REIT ETFs on the market, but has amassed nearly $300 million since inception in 2007.

Index & Strategy

FRI tracks the S&P United States REIT Index. The index covers U.S. REIT shares, including some specialty REITs such as prisons, but holds no timber REITs. Due to criteria that the companies own properties, the index also excludes mortgage REITs. The holdings are weighted by market cap. The holdings and the weightings in FRI are most similar to those of the Vanguard REIT Index ETF (NYSEARCA:VNQ), which tracks the MSCI US REIT Index.

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