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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
Managed by Invesco, KBWY has amassed assets over $310.37 million, making it one of the average sized ETFs in the Real Estate ETFs. KBWY, before fees and expenses, seeks to match the performance of the KBW Nasdaq Premium Yield Equity REIT Index.
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 KBWY, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 8.21%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For KBWY, it has heaviest allocation in the Real Estate sector --about 100% of the portfolio.
Looking at individual holdings, Innovative Industrial Properties Inc (IIPR) accounts for about 6.9% of total assets, followed by Community Healthcare Trust Inc (CHCT) and Millrose Properties Inc (MRP).
KBWY's top 10 holdings account for about 41.6% of its total assets under management.
Performance and Risk
So far this year, KBWY has added about 23.33%, and was up about 24.67% in the last one year (as of 08/14/2026). During this past 52-week period, the fund has traded between $14.97 and $19.19.
The ETF has a beta of 0.99 and standard deviation of 20.05% for the trailing three-year period, making it a medium risk choice in the space. With about 33 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.
State Street 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. State Street Real Estate Select Sector SPDR ETF has $8.67 billion in assets, Schwab U.S. REIT ETF has $11.4 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.
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Invesco KBW Premium Yield Equity REIT ETF (KBWY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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