“You have to keep an eye on the Fed,” Merrill Ross, REIT analyst with Wunderlich Securities, said in the article. “As short-term interest rates start to rise, it’s a good time to get out of these stocks.”
The iShares FTSE NAREIT Mortgage REITs Index Fund (NYSEArca: REM) tracks U.S. residential and commercial REITs. Its top two holdings, Annaly Capital Management (NYSE: NLY) and American Capital Agency (NYSE: AGNC), make up 36.8% of the overall portfolio while other the rest of the holdings are less than 5%. REM has a 0.48% expense ratio and a 11.24% 12-month yield. The fund is up 26.2% over the past year.
The Market Vectors Mortgage REIT Income ETF (NYSEArca: MORT) is a similar fund, except its allocation to NLY and AGNC makes up 29.9% of the overall portfolio. MORT comes with a 0.40% expense ratio and a 10.76% 12-month yield. The ETF is up 28.0% over the last year.
iShares FTSE NAREIT Mortgage REITs Index Fund
For more information on real estate investment trusts, visit our REITs category.
Max Chen contributed to this article.