Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

The ETF Portfolio Strategist: U.S. REITs Remain Hot

By James PicernoStock MarketsJun 13, 2021 12:57AM ET
www.investing.com/analysis/the-etf-portfolio-strategist-us-reits-remain-hot-200585742
The ETF Portfolio Strategist: U.S. REITs Remain Hot
By James Picerno   |  Jun 13, 2021 12:57AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

US REITs rise for a fourth week

Shares of US real estate investment trusts (REITs) can do no wrong these days. After a relatively sluggish rebound from the coronavirus crisis last year, securitized real estate is making up for lost time.

Vanguard Real Estate Index Fund ETF Shares (NYSE:VNQ) topped last week’s performances for our global opportunity set (see table below), based on trading through Friday’s (June 11). VNQ rose 2.5% for the week, building on the previous week’s 2.7% rally. The fund hasn’t had a down week since mid-May.

VNQ Weekly Chart
VNQ Weekly Chart
G.B 16 Ranked By 1-Week Returns
G.B 16 Ranked By 1-Week Returns

Foreign property shares continue to rally too. Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares (NASDAQ:VNQI) rose 1.5% last week, second only to VNQ.

VNQI Weekly Chart
VNQI Weekly Chart

Supporting the yield-oriented market for securitized real estate: another week of falling interest rates. The 10-year Treasury yield declined for a fourth straight week, slipping to 1.47%—close to a three-month low. Notably, the 10-year rate fell below it’s 20-week average for the first time in nearly a year. The implication: flat-to-lower rates remain the baseline outlook.

US10Y Weekly Chart
US10Y Weekly Chart

Lower yields, of course, equate with higher bond prices and iShares 7-10 Year Treasury Bond (NYSE:IEF) rallied 0.7%. The bearish trend in the first quarter for IEF has reversed course, at least relative to recent history. The fund ended the week near its highest level since late-February.

IEF Weekly Chart
IEF Weekly Chart

US stocks rose, too, although results are middling this week relative to markets around the world. Nonetheless, Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI) added 0.7%, closing at a record high.

VTI Weekly Chart
VTI Weekly Chart

There were several losers on our radar for asset classes last week, primarily in Asia. The biggest setback: stocks in Africa VanEck Vectors Africa Index ETF (NYSE:AFK), which fell for the first time in four week with a 1.2% slide.

AFK Weekly Chart
AFK Weekly Chart

Strategy benchmarks continue to rise

It was another good week for our portfolio benchmarks. After several weeks of trailing globally diversified strategies, the US 60/40 Index (US.60.40) topped the charts, rising 0.7%. Year-to-date, the US strategy gauge is still trailing with a relatively modest 7.6%, but with US rates flat to lower, perhaps there’s a revival brewing. For details on all the strategy rules and risk metrics, see this summary.

Leading the way so far in 2021: Global Beta 16 (G.B16), which remains comfortably on top with a strong 10.3% year-to-date return.

There are several potential demons lurking, including the possibility that hotter-than-expected inflation will spoil the party. US consumer prices continue to surprise on the upside, as the CPI report for May shows. But markets shrugged off the news, preferring instead to side with the Federal Reserve and assume that higher inflation of late is a temporary affair.

As BNY Mellon Investment Management’s chief strategist, Alicia Levine advised, the Fed’s willingness to keep rates lower for longer is a “great recipe for risk assets.”

Analysts are fiercely debating if policymakers are making a strategic error—or looking through noise. Markets, however, remain convinced that nothing much has changed and it’s still timely to favor risk-on.

Portfolio Strategy Benchmarks
Portfolio Strategy Benchmarks
Global Beta 16 Sectors
Global Beta 16 Sectors
The ETF Portfolio Strategist: U.S. REITs Remain Hot
 

Related Articles

Tim Knight
Looming Ceilings For Some ETFs By Tim Knight - May 27, 2022 3

Ever since last week, the market has been slicing the heads off bears left and right, with the Dow up thousandsof points and the S&P 500 Futures up about 300. It’s been...

The ETF Portfolio Strategist: U.S. REITs Remain Hot

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email