The Sheaff Brock Real Estate Income & Growth portfolio is a fully invested portfolio of publicly traded Real Estate Investment Trusts (REITs). Publicly traded equity REITs are tax-advantaged companies that represent ownership in actively managed, income-producing commercial real estate properties. The equity REIT objective is to generate current income, and seek the opportunity for growth and capital appreciation. Sheaff Brock takes a conservative and disciplined approach with the overall portfolio management of equity REITs, seeking a diversified portfolio of REITs across sectors in order to generate current income and offer the opportunity to participate in long-term capital appreciation.
The primary objectives of the Sheaff Brock REIT portfolio strategy are twofold:
The Sheaff Brock Real Estate Income & Growth portfolio invests and diversifies across 20 U.S. publicly traded REITs. The REITs are selected based on Sheaff Brock's investment process of managing downside risk while focused on capturing current income and the opportunity for capital appreciation. The strategy is comprised of generally small and mid-sized capitalization REITs that can be represented in any of the 13 REIT sectors of the equity REIT universe. Investors can expect the strategy to seek current income and conservative growth through stock price appreciation and the opportunity for dividend growth.
INVESTMENT METHODOLOGY & PORTFOLIO CONSTRUCT
The strategy is comprised of publically traded equity REITs that are represented in the 13 REIT sectors. The portfolio will selectively invest in the sectors that meet Sheaff Brock’s fundamental requirements. The portfolio will not necessarily always be invested in all 13 REIT sectors. The strategy is comprised of small to mid-capitalization U.S. REITs that meet the investable criteria as determined by the Sheaff Brock Investment Committee and Portfolio Manager. Sheaff Brock employs a bottom-up approach toward the security selection. The REITs are chosen using specific fundamental research that is unique to REIT analysis, which enables the Sheaff Brock management team to focus on downside risk as the initial screen. Utilizing institutional research, the initial filters include market capitalization, dividend yield, free cash flow, quality of earnings, FFO estimates, return on equity, and asset growth. Following the initial screen, the Sheaff Brock investment team applies both technical and fundamental research tools focused on sector analysis, industry trends, and the macro-economic environment in order to make the final selection of REITs to be included in the portfolio.
The sell discipline follows a two-step review. First, a REIT can be put on watch and potentially sold if the research and analysis results in the REIT forecast showing deterioration in the overall fundamentals and the downside risk metrics, and, secondly, if the yield falls below the targeted yield. Expect low turnover in the portfolio.