Smart Beta Fund ICF: A Structural Analysis
ICF versus PJP
The iShares Cohen & Steers REIT ETF (ICF) is based on the Cohen & Steers Realty Majors Index. As a smart beta fund, ICF passively tracks its actively managed index. The index provider selects those stocks that are mostly engaged in income-producing real estate.
A similar thematic smart beta fund is the PowerShares Dynamic Pharmaceuticals ETF (PJP), which builds it portfolio based on momentum pharmaceutical holdings.
PJP’s index provider selects the majority of its stocks from the pharmaceuticals sectors. These pharmaceutical stocks, as defined by the fund’s prospectus, are companies that are engaged principally in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs of all types.
Increased fund inflow growth
The above chart provides information on historical fund inflows and average volumes of shares traded of ICF in comparison with PJP. It should be noted that ICF has observed healthy growth in its fund inflow after negative fund inflow (or fund outflow) in 2013, surpassing PJP’s total fund inflows in 2014 and 2015. ICF’s average volume of shares traded daily is higher than PJP’s average volume and is also on an upward trend.
The top holdings of ICF include REIT stocks such as Simon Property Group (SPG), Prologis (PLD), Welltower (HCN), and Ventas (VTR).
PJP’s top holdings, on the other hand, include pharmaceutical stocks such as Bristol-Myers Squibb (BMY), Pfizer (PFE), and Merck & Co. (MRK).
ICF’s top ten holdings represent 55.8% of its total portfolio, whereas PJP’s top ten holdings represent 51.8% of its portfolio.
We’ll study the portfolio structure of ICF in detail in the next part of this series.
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