S&P Dow Jones Indices has announced the launch of the Dow Jones Townsend Core U.S. REIT Index. The new index, which is designed in collaboration with The Townsend Group, aims to provide risk and return characteristics typical of direct core real estate investments through a basket of liquid publicly-traded real estate investment trusts (REITs).
The index constituent companies are members of the Dow Jones U.S. Select REIT Index. The property types eligible for inclusion are limited to companies involved in activities that are focused on longer-term rent generation. Conversely, property types that tend to include shorter lease-term focused REITs – such as factory outlets, hotels, manufactured homes and mixed-use properties – are excluded. A capping scheme is employed to enhance diversification and limit single stock concentration.
‘The Dow Jones Townsend Core U.S. REIT Index is designed to serve as an investable proxy for privately-held core real estate investments,’ says Michael Orzano, associate director of global equity indices at S&P Dow Jones Indices. ‘The index fulfills a need in the market for a representative measure of the characteristics of core property investments, constructed using liquid, publicly-traded REITs.’
‘We believe that this Index provides market participants with additional tools which can be used to better manage their existing portfolios,’ says Chris Lennon, portfolio manager at The Townsend Group.