S&P Dow Jones Indices has launched the Dow Jones US Select Equal Weight Reit Index, which is designed to serve as a proxy for direct real estate investment by measuring the performance of publicly traded Reits and Reit-like securities.
The index launch represents an expansion of the widely recognised Dow Jones Real Estate index family.
"The launch of this Index is indicative of the investment community's growing interest in Reits," says Michael Orzano, associate director of global equity indices at S&P Dow Jones Indices. "Equal-weighting is a logical product extension as market participants' attitudes towards Reits mature and they begin to seek more nuanced products in the asset class."
The index is a subset of the Dow Jones US Select Real Estate Securities Index. The index constituents must be both an equity owner and operator of commercial and/or residential real estate and at least 75 per cent of the company's total revenue must be derived from the ownership and operation of real estate assets. Businesses that are classified as Specialty under the REIT/RESI Industry Classification Hierarchy (net-lease Reits, timber Reits, railroad Reits, tower Reits, etc.) and hybrid REITs are excluded.
The equal weighting scheme of the index alters the investment characteristics of the portfolio by reducing the impact of the largest companies and increasing the impact from the smaller companies.
A Canadian Dollar hedged version of the index has been launched concurrently.