Historically, December is a good month for the S&P 500, but there are also sector-level opportunities for investors to consider in the final month of the year. Data suggest the iShares Dow Jones US Real Estate Index Fund (NYSEArca: IYR) is one of those ideas.
Although it is widely expected that the Federal Reserve will raise interest rates for the third time this year when the central bank meets in December, that is not keeping some investors from embracing rate-sensitive assets, such as real estate exchange traded funds.
“The IYR exchange-traded fund (ETF) has averaged a healthy December gain of 2.21% over the past 10 years, according to Schaeffer’s Senior Quantitative Analyst Rocky White — among the best of all ETFs that we track. Plus, the fund has ended the month higher 60% of the time, and rallied roughly 2.8% last December, despite the Fed hiking rates,” according to Schaeffer’s Investment Research.
Real estate investment trusts, or REITs, are securities that trade like a stock and invest in real estate directly through property ownership or mortgages. Consequently, revenue are mainly generated through rents or interest on mortgage loans. To qualify for special tax considerations, the asset also distributes the majority of income, about 90% of taxable profits, to investors as dividends.