ETF Chart of the Day: Mortgage REITs

October 1st at 2:52pm by Paul Weisbruch, Street One Financial

Given our highlighting of two prominent REIT based ETFs last Friday, IYR (iShares DJ U.S. REIT) and VNQ (Vanguard REIT) and related asset inflows as of late, we have the opportunity today to feature another ETF in the broader REIT sector that has caught some attention recently.

REM (iShares FTSE NAREIT Mortgage Plus Capped Index) is not as well known as IYR and VNQ having debuted in 2007, but the fund has quietly raised approximately $900 million in AUM and averaged more than 960,000 shares currently in daily trading volume.

Unlike IYR and VNQ, REM is concentrated in the Mortgage REIT sub-sector, and holds names including NLY (20.20%), AGNC (18.06%), TWO (5.52%), CYS (4.73%), and ARR (4.54%) in its top five weightings currently (29 holdings overall in the fund).

Clearly, REM has been positively impacted by the Fed’s QE3 announcement, as has related ETF in the mortgage space, MBB (iShares Barclays MBS Bond) and many of the underlying stocks in REM have bounced considerably and on short notice.

For instance, if one looks at a simple chart for top REM holding NLY, the stock was trading with a $14 handle back in mid April of this year, and currently the stock has risen an impressive 15 plus percent over the past 5 months. Put simply, like many REIT plays, REM has been able to boast both satisfying returns (+18.72% YTD) as well as a monstrous yield (currently a hefty 10.86%), which are likely draws to investors looking to deploy cash selectively in these markets.

iShares FTSE NAREIT Mortgage Plus Capped Index

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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