AXS Investments, a New York City-based asset manager, has added a new exchange-traded fund (ETF) to its fund lineup with the introduction of AXS Real Estate Income ETF (RINC).
The RINC ETF marks the launch of the AXS partnership with Gapstow Capital Partners, which developed the fund’s underlying index, the Gapstow Real Estate Income Index (GREI). The new proprietary index is designed to track publicly traded mortgage REITs (mREITs) that own and/or originate real estate debt.
According to the companies, RINC is equally weighted by sector – 50% commercial real estate lending, 25% non-agency residential real estate debt, and 25% agency residential real estate debt – with the mREITs within those sectors also equally weighted. The index rebalances quarterly to maintain its diversified exposure.
“We’re very excited to bring RINC to market as a unique offering within our range of alternative income-focused solutions,” said Greg Bassuk, CEO of AXS Investments. “As investors seek higher yields, many have become overly reliant on corporate junk bonds, which can bring risks with regard to their quality, duration and ties to the corporate credit cycle. With RINC, investors and advisors now have the ability to diversify the high-yield sleeve of their portfolios and complement a broader real estate or alternatives portfolio with unique exposure to the credit side of real estate and an alternative to high yield corporates.”
“mREITs in general are currently trading at compelling valuations and wide spreads by historical standards as the category has had to digest a rapid rise in interest rates, high office vacancies and a short flurry of banking crises, all in short order,” said Gapstow CEO Chris Acito. “But rates eventually normalize, demand for residential housing remains high, and a clear retrenchment of banks from real estate lending should provide significant opportunity to a range of mREITs to both take on and originate compelling new debt investments. An equal-weighted, well-diversified approach to accessing the space will be key as the category enters its next phase, and the GREI index we created to underpin RINC is one we expect to effectively capture these changing market dynamics.”