ETF Spotlight: Mortgage REITs

June 27th at 1:51pm by Tom Lydon

ETF Spotlight on the iShares FTSE NAREIT Mortgage REITs Index Fund (NYSEArca: REM), part of an ongoing series.

Assets: $439.4 million.

Objective: The iShares FTSE NAREIT Mortgage Plus Capped Index Fund tries to reflect the performance of the FTSE NAREIT All Mortgage Capped Index, which is comprised of U.S. residential and commercial mortgage real estate stocks.

Holdings: Top holdings include: Annaly Capital Management 22.7% (NYSE: NLY), American Capital Agency Corp 17.1% (NasdaqGS: AGNC), Starwood Property Trust (NYSE: STWD) 4.5%, Chimera Investment Corp (NYSE: CIM) 4.5% and Invesco Mortgage Capital (NYSE: IVR) 4.5%.

What You Should Know:

  • BlackRock‘s iShares sponsors the fund.
  • REM has an expense ratio 0.48%.
  • The fund has 29 holdings and the top 10 make up 73.3% of the overall fund.
  • Sub-sector allocations include: mortgage REITs 98.2%, Industrial & Office REITs 0.4%, S-T Securities 0.1% and other 1.3%.
  • REM has a yield of 11.5%.
  • The fund is up 2.0% over the last month, up 5.6% over the last three months and up 16.8% year-to-date.
  • The ETF is 1.6% above its 200-day exponential moving average.

The Latest News:

  • Michael Commaroto, CEO of Apollo Residential Mortgage (NYSE: AMTG), believes the depressed values in housing and financial assets provide a good opportunity for REITs, reports Allen Kenney for REIT.com.
  • Commaroto points to both book value growth and dividend yield as major factors to REITs’ strength.
  • “Both of those are really driven by the fundamentals of the industry, and the fundamentals that are really driving it are asset selection, both on the agency side of the business and non-agency side of the business,” Commaroto said at REITWeek 2012.
  • Since the 2008 financial crisis, mortgage REIT businesses have changed for the better.
  • “Personal balance sheets have gotten so hammered as part of the recent recession and property values have gotten so depressed that it became harder for people to refinance,” he added. “Banks also became much more risk adverse.”

iShares FTSE NAREIT Mortgage REITs Index Fund

For past stories in this series, visit our ETF Spotlight category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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