The slightly more rate-sensitive mortgage REITs, though, still show relatively low valuations and provide high yields. The Market Vectors Mortgage REIT Income ETF (NYSEArca: MORT) has a 10.1% 12-month yield and a 9.2 P/E while the iShares Mortgage Real Estate Capped ETF (NYSEArca: REM) has a 14.59% 12-month yield and a 9.1 P/E. [Financial Sector ETFs to Generate Yields]
Despite potential rate risks, Peters remains positive on the space as economic fundamentals could continue to support growth.
Fund managers argue that while the real-estate funds may experience short-term swings due to interest rate changes, the funds’ underlying outlook remains positive, pointing to a growing U.S. economy, improving employment rate and greater foreign investment demand for U.S. REITs. [Fundamentals to Support REIT ETFs, Outweighing Rate Risk]
For more information on real estate investment trusts, visit our REITs category.
Max Chen contributed to this article.