ReTF stands for real estate thematic fund.
What is a ReTF?
ReTFs combine the thematic investment strategies of an ETF (exchange traded fund) with the real estate ownership and tax benefits of a REIT (real estate investment trust).
ReTFs pool investors' capital to acquire a portfolio of properties within an ultra-specific investment target (for example, Manhattan apartments.)
Compound intends to apply to list each ReTF on NASDAQ or the NYSE as they become eligible, which would provide investors with liquidity, like any other publicly listed security.
ReTFs are taxed as real estate investment trusts.
ReTFs are proprietary real investment products created by Compound and are only available through Compound and its network of broker dealers. We created ReTFs to provide investors with targeted real estate exposure in markets with high barriers of entry.
To be clear, a ReTF is NOT an ETF.
What is an ETF?
ETF stands for exchange-traded fund.
ET = "exchange-traded"
An ETF is traded on a major stock exchange—like the New York Stock Exchange or Nasdaq. If you've ever traded an individual stock, then buying and selling an ETF will feel familiar because it's traded the same way.
F = "fund"
An ETF is a collection (or "basket") of tens, hundreds, or sometimes thousands of stocks or bonds in a single fund.
ETFs are highly regarded by the professional investment community because of their built-in diversification and low costs.
ETFs traditionally have been index funds, constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500.)
An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value, although deviations can occasionally occur. Most ETFs track an index, such as a stock index or bond index.
What is a REIT?
REITs, or real estate investment trusts, are companies that own or finance income-producing real estate in a range of property sectors. These companies have to meet a number of requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors.
The stockholders of a REIT earn a share of the income produced through real estate investment – without actually having to go out and buy, manage or finance property.
REITs must pay out at least 90 percent of their taxable income to shareholders—and most pay out 100 percent.
What is a REIT ETF?
REIT ETFs are exchange-traded funds that invest in the stocks of publicly-listed REITs and real estate-related companies. REIT ETFs are passively managed around an index of publicly traded real estate companies. REIT ETFs are, by design, intended to emulate or mirror REIT indexes. The two frequently-used indexes are the MSCI U.S. REIT Index and the Dow Jones U.S. REIT Index.
A ReTF is not a REIT ETF.
What makes a ReTF different from a REIT ETF?
ReTFs are REITs which own and manage a diversified portfolio of real estate in one city, only in one asset class.
ReTFs provide investors a way to gain exposure to a specific market with the benefits of professional fund and property management. And when the ReTFs are listed on an exchange, they will also provide liquidity and intraday trading.
REIT ETFs, by comparison, offer exposure to a diverse variety of markets and asset classes because they invest in REIT stocks which are already diversified.
Have we thoroughly confused you? I hope not.
To learn more about ReTFs, set up a time to speak to a Compound representative.
__________________________________________________________Compound is a venture capital-backed asset management firm that creates city-specific residential real estate funds called ReTFs designed for the next generation of investors. Our first fund invests in Manhattan residential real estate, an asset class that has historically been out of reach for the average investor but has outperformed almost every relevant benchmark, including the S&P 500.