Alternative Investments/Real Estate: Kingsbarn Launches ETF Focused On REITs And BDCs
The new Kingsbarn ETF provides dividends along with scope for real estate appreciation.
Kingsbarn Capital Management has introduced the actively managed Kingsbarn Dividend Opportunity ETF (NYSEARCA: DVDN) on the NYSE Arca. This ETF is designed to target equities issued by residential and commercial mortgage Real Estate Investment Trusts (REITs) and business development companies (BDCs), aiming to provide an appealing quarterly dividend while maintaining potential for capital appreciation.
Mortgage REITs and business development companies are known for their low market correlations and consistent dividend distributions, typically falling within the 8% to 10% range. DVDN’s portfolio managers oversee approximately 75 companies across five subsectors, offering a diverse investment universe to tap into individual investment opportunities. They employ proprietary bottom-up financial forecasts to gauge earnings, dividends, and book value sensitivity to changes in macroeconomic conditions.
The fund’s managers generally choose 12-18 companies from three or more of the REIT and/or BDC subsectors, focusing on those believed to offer resilient and attractive dividends under various interest rate scenarios.
This launch coincides with a perceived buying opportunity in the REIT space, driven by rising rates, falling prices, and increased vacancies, potentially leading to increased commercial real estate sales in the coming months. Bank of America strategist Michael Hartnett sees REITs as intriguing, particularly if a recession is averted, making long positions in REITs potentially rewarding for investors.
Active ETFs are gaining momentum, with 2023 poised to surpass the record set in 2021 with 475 active ETF launches. More than half of actively managed ETFs have outperformed their passive counterparts, reflecting their increasing appeal to investors.
Related Story: AXS Investments Launches Mortgage REIT Focused ETF
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