After years of chasing high-yield stocks, investors are finally pulling out of real estate investment trusts and utilities exchange traded funds ahead of a potential Federal Reserve interest rate hike.

Money managers have withdrawn $3.5 billion from REITs and utilities funds this year, reports Dan Strumpf for the Wall Street Journal.

Year-to-date, the Vanguard REIT ETF (NYSEArca: VNQ), the largest real estate investment trust ETF, has experienced $437.7 million in net outflows while the Utilities Select Sector SPDR (NYSEArca: XLU), the largest utilities-related ETF, lost $561 million in assets, according to

Investors are trimming exposure to high-dividend stocks as the Fed signaled it is looking at its first interest rate hike in nine years. The higher rates would bolster payouts on more stable fixed-income assets and make these dividend stocks less attractive, especially after the multi-year run. [Bond Proxy ETFs Show Some Investors Believe Rates Will Rise]

REITs and utilities have “become very crowded trades,” Willie Delwiche, investment strategist at Robert W. Baird & Co., said in the article. “There’s this search for and thirst for yield all over the place that has pushed investors into asset classes that they wouldn’t otherwise be in.”

While fixed-income assets traded near historic lows over the past few years, investors have piled into higher yielding dividend stocks, such as REITs and utilities. Consequently, these assets are now trading at expensive valuations.

For instance, utilities stocks were recently trading at 18.5 times the last 12 months of earnings, compared to 17 at the start of last year. XLU, though, shows a forward 16.9 P/E ratio. Additionally, VNQ is trading at a 38.8 P/E ratio.

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