There are plenty of exchange-traded funds offering exposure to real estate investment trusts (REITs), but most are traditional, market cap-weighted funds. That changed a bit Tuesday with the debut of the Lattice Real Estate Strategy ETF RORE.
RORE “is the first US-focused Real Estate Investment Trust (REIT) ETF to apply the innovations of risk-first investment design with a multifactor approach. The fund seeks to deliver a competitive yield and improve return potential in US REITs by diversifying across property types and selecting REITs with a favorable combination of factors, such as quality, momentum, and value,” according to Lattice Strategies.
The Atmosphere Has Been All-But Perfect
This year has been a perfect storm for real estate investment trusts (REITs) and the corresponding exchange-traded funds. Not only has the Federal Reserve passed on raising interest rates to this point in the year, but real estate recently became the S&P 500's eleventh sector after separating from financial services.
RORE tracks the Lattice Risk-Optimized Real Estate Strategy Index with the objective of beating traditional real estate benchmarks, such as the MSCI US REIT Index.
“RORE seeks to track an index which is designed to capture the income and growth potential of investing within the U.S. REIT universe. The strategy selects equity securities of REITs exhibiting a favorable combination of factor characteristics, including quality, momentum, and value. RORE is the first ETF launched by Hartford Funds since the firm acquired Lattice Strategies just over 60 days ago,” according to a statement.
REITs and the corresponding ETFs are sensitive to interest rates, and with the Federal Reserve now eyeing a December rate hike, these funds could be pinched in the near term.
RORE charges 0.45 percent per year, or $45 on a $10,000 investment.
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