The Invesco KBW Premium Yield Equity REIT ETF (KBWY) made its debut on 12/02/2010, and is a smart beta exchange traded fund that provides broad exposure to the Real Estate ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $250.43 million, making it one of the average sized ETFs in the Real Estate ETFs. KBWY seeks to match the performance of the KBW Nasdaq Premium Yield Equity REIT Index before fees and expenses.
The KBW Nasdaq Premium Yield Equity REIT Index is a dividend weighted index seeking to reflect the performance of approximately 24 to 40 small- and mid-cap equity REITs in the US.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 9.50%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
KBWY's heaviest allocation is in the Real Estate sector, which is about 100% of the portfolio.
When you look at individual holdings, Brandywine Realty Trust (BDN) accounts for about 6.17% of the fund's total assets, followed by Innovative Industrial Properties Inc (IIPR) and Community Healthcare Trust Inc (CHCT).
KBWY's top 10 holdings account for about 46.85% of its total assets under management.
Performance and Risk
The ETF has lost about -4.61% and is down about -17.23% so far this year and in the past one year (as of 10/01/2025), respectively. KBWY has traded between $14.41 and $21.18 during this last 52-week period.
The fund has a beta of 1.14 and standard deviation of 22.67% for the trailing three-year period, which makes KBWY a medium risk choice in this particular space. With about 28 holdings, it has more concentrated exposure than peers .
Alternatives
Invesco KBW Premium Yield Equity REIT ETF is not a suitable option for investors seeking to outperform the Real Estate ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Real Estate Select Sector SPDR ETF (XLRE) tracks Real Estate Select Sector Index and the Schwab U.S. REIT ETF (SCHH) tracks Dow Jones U.S. Select REIT Index. Real Estate Select Sector SPDR ETF has $7.88 billion in assets, Schwab U.S. REIT ETF has $8.37 billion. XLRE has an expense ratio of 0.08% and SCHH changes 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Real Estate ETFs
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Invesco KBW Premium Yield Equity REIT ETF (KBWY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
