REITs provide diversification benefits as the asset shows a lower correlation to stocks and bonds. However, the asset category has recently experienced heightened volatility due to interest rate risks. Some investors fear REITs will act negatively in rising interest rate environment. The high dividends in REITs are attractive in a low-rate environment but are less enticing once safer Treasuries show higher rates.
Related: ETF Investors Are Hedging Bets with Long-Term Treasuries
The utility of DRN and the bearish DRV will be on display over the next weeks as a slew of REITs report third-quarter earnings. This week, over 36% of the MSCI US REIT Index reports third-quarter results followed by more than 35% next week, according to Direxion data.
For more information on the real estate investment trusts segment, visit our REITs category.