Exchange traded funds holding real estate investment trusts (REITs) have been plagued this year by concerns the Federal Reserve will soon raise interest rates. Those concerns have translated into more than $1.7 billion in combined assets flowing out of the Vanguard REIT ETF (NYSEArca: VNQ) and the iShares Dow Jones US Real Estate Index Fund (NYSEArca: IYR).
Investors would also be taking a broad view on economic growth with REITs investments. Some investment experts argue that since commercial property has a larger presence in the U.S. economy than REITs do in the equities market, investors could benefit from a 5% to 10% allocation to REITs to bring their investments more in line with commercial property’s significance in the overall economy. [REIT ETFs Still Have a Place in an Investment Portfolio]
Treasury yields have ebbed in recent weeks in response to an array of global macro concerns and those falling yields could reinvigorate interest in income-generating ETFs, including REIT funds such as the low-cost Schwab US REIT ETF (NYSEArca: SCHH).
SCHH “seeks to provide investors with broad exposure to retail, residential, office, industrial and specialized REITs. Taking a look at the five-year weekly chart below, you can see that it is trading within an extremely strong uptrend. Notice how the 100-week exponential moving average (blue line) has propped up the price since late 2012. Most technical traders will hold a bullish outlook on this ETF. The recent bullish crossover between the MACD indicator (moving average convergence divergence) and its signal line (blue circle) suggests that SCHH will likely bounce even higher from here. Active traders will now watch for a return move toward the swing high of $42.54,” according to Investopedia.
Broad REIT ETFs, such as SCHH, include exposure to various sub-sectors including, diversified REITs, healthcare REITs, hotel & resort REITs, industrial REITs, office REITs, residential REITs, retail REITs and specialized REITs.