While IYR’s outflows have recently been modest, second-quarter REIT ETF departures have been anything but slight. Investors have yanked $1.9 billion from VNQ, the largest REIT ETF, this quarter. Only three ETFs have lost more assets over that period. Nearly $1.6 billion has been pulled from IYR, a total surpassed by just five other ETFs.
There are other catalysts that can help REIT ETFs navigate a rising rate environment, including still high levels of apartment renting. Apartment demand has not let up, despite calls that improving economic conditions would push more into buying homes. Supporting the increased rental demand, millennials are finding jobs and moving out to cities.
Moreover, without meaningful wage increases, renters may be stuck with rental apartments as they are not able to save enough for that first home down payment. [Renters Are Stuck, Continue to Support Residential REITs ETFs]
iShares Dow Jones US Real Estate Index Fund
