Written by David Fabian, January 24th, 2018
Stocks have come roaring out of the gate to start 2018 as the bull market extends to unprecedented heights. Momentum and volatility-agnostic investors have been treated to a continuation of the same strong trends that dominated last year’s markets. Yet, even with so much enthusiasm spread among the major diversified indices, there remains lackluster sentiment for many interest-rate sensitive stocks and sectors.
Interest-rate sensitivity has traditionally been the realm of fixed-income, where bond prices and bond yields are negatively correlated. Nevertheless, there are many areas of the U.S. equity markets that also key in to the fluctuations of U.S. Treasury yields. The foremost of which are utility, REIT, and financial stocks.
Read the complete article at NASDAQ.com
Written by David Fabian, January 18th, 2017
ETF investors are likely measuring the resilience and relative performance of their portfolios during the latest 6-month jump in interest rates. Bond funds are the obvious areas of concern in terms of volatility. However, many stock and equity-income asset classes maintain a high sensitivity to Treasury yield fluctuations as well.
REITs certainly fall into this category and are one of the few sectors of the market currently trading well off their highs. As I wrote in September, inflection points in interest rates typically signal a change of trend for these assets. Read more
Written by David Fabian, December 03rd, 2016
Real estate stocks have taken a beating in recent months as rising interest rates derail the momentum of this beloved income sector. Yet despite the dip in traditional housing and commercial REITs, one high yield segment of the market is still seeing surging prices.
Mortgage REITs (or mREITs) have largely ignored the trend in Treasury bonds and instead focused on the continued strength in overall credit conditions. This has translated into new all-time highs for the small group of exchange-traded funds that track these investments. Read more
Written by David Fabian, September 18th, 2016
Real Estate Investment Trusts, or REITs, have become a prominent segment of the stock market over the last several decades. These investments have become so popular that the Global Industry Classification Standard (GICS) just recently split them off from the financial sector to form its own standalone category. REITs are now considered a key player within the S&P 500 Index and other major U.S. benchmarks. Read more
Written by David Fabian, May 17th, 2016
The allure of high yields is something that income investors are always tempted to chase. When you couple an outsized dividend payout with an explosion of momentum, the attraction can become even further exacerbated. This is exactly what happened earlier this month when Jeffrey Gundlach offered a recommendation for investors to purchase the iShares Mortgage Real Estate Capped ETF (REM) and simultaneously short the Utility Select Sector SPDR (XLU).
Since that call, REM has only experienced a single minimal down day among nine trading sessions and daily volume has exploded in kind. The chart below shows how much Gundlach’s recommendations carry weight throughout the income-focused investment community.