“This sector is going to woefully underperform in a rising rate environment,” Jonathan Pong, an analyst at Robert W. Baird & Co., told Bloomberg News. “History proves that out.”
ETFs that specialize in mortgage REITs pay higher yields but have been punished even more this year as Treasury yields climb. The iShares Mortgage Real Estate Capped ETF (NYSEArca: REM) and Market Vectors Mortgage REIT Income ETF (NYSEArca: MORT) are both in the red for 2013 and have suffered declines of about 14% the past three months. [Mortgage REIT ETFs Slammed]
iShares US Real Estate
Full disclosure: Tom Lydon’s clients own REM.