“If mortgage rates increase and the Fed keeps short-term interest rates low, these REITs will post strong performance,” according to Morningstar analyst Abby Woodham. “With financing so cheap, mortgage REITs have used leverage to provide an attractive yield. However, because these firms are so extensively leveraged, they are very susceptible to interest-rate fluctuations.”
iShares FTSE NAREIT Mortgage Plus Capped Index Fund
For more information on real estate investment trusts, visit our REITs category.
Max Chen contributed to this article.