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  • Alex Pettee, CFA

Income In The Yield Desert

  • One of the lasting lessons from a tumultuous 2020 was to "expect the unexpected." Several property sectors exhibited unexpected resilience that seemingly defied the macroeconomic headwinds.

  • No sector defied the headwinds more than the Net Lease REIT sector. Of the 52 equity REITs that paid higher total dividends in 2020, nine were net lease REITs.

  • "Net lease" refers to the triple-net lease structure, whereby tenants pay all expenses related to property management. This lease-type proved to be particularly durable throughout the turmoil.

  • One ETF focuses on this particular lease type - the NETLease Corporate Real Estate ETF (NETL) - which was the 5th best-performing fund in the Morningstar Real Estate ETF Category in 2020.

  • In this ETF Spotlight, we take a look under the hood of NETL and the factors driving the performance of the net lease REIT sector, which offers an attractive alternative to traditional fixed-income investments.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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Hoya Capital Research & Index Innovations is an affiliated index provider and research firm that builds custom indexes tracking U.S. commercial and residential real estate sectors, including indexes tracked by exchange-traded funds (ETFs). 

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