Core Viewpoint - The 2025 stock market rally was concentrated in mega-cap technology companies, but a broader rally is anticipated in 2026 as earnings growth expands to other sectors, prompting investors to seek balanced exposure across all market sectors [1]. Group 1: Sector Allocation and Strategy - The ALPS Equal Sector Weight ETF (EQL) allocates approximately 9% to each of the 11 S&P 500 sectors, significantly overweighting underperforming sectors that may benefit from market broadening [2]. - EQL automatically rebalances quarterly to maintain equal sector weights, providing a diversified investment approach [2]. - Energy and utilities, which represented only 2.89% and 2.35% of the S&P 500 respectively at year-end, receive approximately 9% allocations each in EQL, more than triple their weights in the cap-weighted benchmark [4]. Group 2: Growth Drivers and Market Trends - Surging electricity demand from artificial intelligence data centers is creating new growth drivers for the energy and utilities sectors, shifting the investment case beyond traditional defensive characteristics [5]. - The infrastructure sectors may benefit from the multi-year buildout required to support AI computing needs, with EQL providing substantially higher exposure to these sectors [6]. - Real estate, another underweighted sector in the S&P 500 at just 1.94%, receives approximately 9% allocation in EQL, positioning investors to benefit from potential property valuation support in a lower-rate environment [7]. Group 3: Performance and Investor Interest - The equal sector strategy has gained traction, with EQL attracting $22.08 million in net flows over the past month and $125.53 million over the past year, now holding over $589 million in assets [8]. - EQL posted a 13.53% gain over one year, 15.63% annualized over three years, and 12.78% annualized over five years, with a 0.27% expense ratio after fee waivers through March 2026 [9]. Group 4: Market Rotation Insights - December's market action indicated a potential sector rotation, with leadership broadening beyond technology as financials, materials, and industrials led the S&P 500, benefiting strategies with balanced sector exposure [10].

Core Insights - The bull market is nearing its third anniversary, with the Real Estate Select Sector SPDR ETF (XLRE) being the worst performer among the 11 S&P 500 sector ETFs, indicating a significant underperformance in property stocks [1]. Group 1 - The Real Estate Select Sector SPDR ETF (XLRE) has collectively returned just a fraction compared to other sectors, highlighting challenges in the real estate market [1].

Core Viewpoint - The Invesco KBW Premium Yield Equity REIT ETF (KBWY) is a smart beta ETF designed to provide broad exposure to the Real Estate sector, focusing on small- and mid-cap equity REITs with a dividend-weighted strategy [1][5]. Fund Overview - KBWY was launched on December 2, 2010, and is managed by Invesco, with total assets exceeding $237.4 million, categorizing it as an average-sized ETF in the Real Estate sector [1][5]. - The fund aims to match the performance of the KBW Nasdaq Premium Yield Equity REIT Index, which includes approximately 24 to 40 small- and mid-cap equity REITs in the US [5]. Cost Structure - The annual operating expense ratio for KBWY is 0.35%, which is competitive within its peer group [6]. - The fund has a 12-month trailing dividend yield of 9.66%, indicating a strong income-generating potential [6]. Sector Exposure and Holdings - KBWY has a 100% allocation in the Real Estate sector, providing concentrated exposure [7]. - The largest holding, Innovative Industrial Properties Inc (IIPR), constitutes about 6.27% of the total assets, with the top 10 holdings making up approximately 46.73% of total assets under management [8]. Performance Metrics - As of July 30, 2025, KBWY has experienced a year-to-date loss of approximately -6.96% and a one-year decline of about -13.17% [10]. - The fund has traded between $14.41 and $21.54 over the past 52 weeks, with a beta of 1.09 and a standard deviation of 23.18% over the trailing three-year period, indicating medium risk [10]. Alternatives - For investors seeking better performance in the Real Estate ETFs segment, alternatives such as the Real Estate Select Sector SPDR ETF (XLRE) and Schwab U.S. REIT ETF (SCHH) are available, with XLRE having $7.77 billion in assets and SCHH at $8.23 billion [12]. - XLRE has a lower expense ratio of 0.08%, while SCHH has an expense ratio of 0.07%, making them potentially more attractive options for cost-conscious investors [12].