Several years ago, Dos Equis beer ran its “most interesting man in the world” ad campaign with a gray-bearded, debonair gentleman who could do no wrong. In that spirit, we present to you the “most interesting new ETFs in the world.” Or, at least. one man's take on the most interesting new ETFs that launched in 2019.
Some of the ETFs mentioned are upstarts and haven’t yet accumulated significant assets. They also lack the brand power of an iShares or SPDR fund. Nevertheless, they offer practical solutions for obtaining coverage to needed but overlooked and underserved markets.
Just The Net Lease Please!
While many real estate investment trust funds contain net lease REITs as part of their holdings, NETL is a pure-play in this category.
The NETLease Corporate Real Estate ETF (NETL) screens for equity REITs that focus on leasing properties to single tenants under net leases that make tenants responsible for the payment of most, if not all, operating expenses. The “triple net lease"—whereby the tenant pays the property taxes, insurance and maintenance—is the most common type of net lease.
NETL contains 24 holdings with W.P. Carey, Realty Income Corp. and National Retail Properties the top three positions. The fund charges 0.60% annually, and has accumulated $38.2 million in assets since its debut in March.
Home Alone, Version 2.0
The problem with housing ETFs is their tendency to be dominated by heavyweights like home improvement retail giants Home Depot or Lowe’s, which distorts their exposure to the housing market. The Hoya Capital Housing ETF (HOMZ) aims to avoid this by making sure key stocks within key segments of the housing market are being tracked and that no single company has too much say.
HOMZ's underlying yardstick, the Hoya Capital Housing 100 Index, segregates its 100 stock holdings into four areas: home ownership and rental operations; home building and construction; home improvement and furnishings; and home financing, technology and services. The home ownership and home building subsectors receive a 30% fixed weighting while the remaining two subsectors are limited to a 20% weighting. The overall effect is a more balanced approach to U.S. housing exposure.
The U.S. real estate sector represents less than 3% of the S&P 500's exposure, and HOMZ offers a novel solution for getting direct exposure to the housing market portion of it. HOMZ began trading in March and has $9.3 million in assets. Its net expense ratio is 0.45%.