Investors interested in gaining exposure to the broad REITs sector have a number of broad options available. For instance, the Vanguard REIT ETF (NYSEArca: VNQ), SPDR Dow Jones REIT ETF (NYSEArca: RWR) and iShares Dow Jones US Real Estate Index Fund (NYSEArca: IYR) are among the most popular REIT ETF plays.
The iShares Mortgage Real Estate Capped ETF (NYSEArca: REM) and the VanEck Vectors Mortgage REIT Income ETF (NYSEArca: MORT) have also been popular niche plays on mortgage real estate investment trusts, or mREITs, as this segment of the market typically generates much more attractive yields. S&P Global Market Intelligence equity analyst Erik Oja argued that government agency mortgage backed securities are more appealing if the U.S. economic recovery moderates and global political stability increases, which could keep pressure on long-term U.S. interest rates.
However, potential investors should be aware that mREITs are also exposed to greater rate-risks and would underperform in a rising interest rate environment.
For more information on real estate investment trusts, visit our REITs category.