Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

The ETF Portfolio Strategist: U.S. REITs Top Market Returns

By James PicernoStock MarketsJul 11, 2021 01:23AM ET
www.investing.com/analysis/the-etf-portfolio-strategist-us-reits-top-market-returns-200590789
The ETF Portfolio Strategist: U.S. REITs Top Market Returns
By James Picerno   |  Jul 11, 2021 01:23AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

This year’s rally in US real estate investment trusts (REITs) was looking tired recently, but it turned out to be a pause that refreshes.

G.B 16 ETFs Ranked By 1-Week Returns
G.B 16 ETFs Ranked By 1-Week Returns

Vanguard Real Estate Index Fund ETF Shares (NYSE:VNQ) roared higher by 2.5% in last week’s trading through Friday’s close (July 9), lifting the fund to a record high.

The gain marked the strongest increase, by far, for our 16-fund global opportunity set last week, as shown in the table above. For details on all the strategy rules and risk metrics, see this summary.

VNQ Weekly Chart
VNQ Weekly Chart

The catalyst? Perhaps it was the ongoing slide in Treasury yields, which casts a favorable light on REITs relatively high payout rates. (VNQ’s trailing 12-month yield: 2.34% vs. 1.37% for a 10-year Treasury Note.)

Whatever the reason, the allure of real estate spilled across borders. The second-strongest performer for our opportunity set—Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares (NASDAQ:VNQI), which rallied 1.3% last week.

VNQI Weekly Chart
VNQI Weekly Chart

US stocks swooned earlier in the week, but by Friday the bullish trend returned. Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI) continued to push higher, ending Friday's session at a new high.

VTI Weekly Chart
VTI Weekly Chart

The small-cap slice of the US equities market, however, continues to trade in a range. The iShares Core S&P Small-Cap ETF (NYSE:IJR) slipped 0.8% for the week.

IJR Weekly Chart
IJR Weekly Chart

The week’s big losers: foreign stocks in Asia ex-Japan and Latin America. The iShares Latin America 40 ETF (NYSE:ILF) tumbled a hefty 3.6%, marking the biggest setback.

ILF Weekly Chart
ILF Weekly Chart

The second-worst performer this week: iShares MSCI All Country Asia ex Japan ETF (NASDAQ:AAXJ), which retreated 2.1%.

A headwind for the fund was China’s expanding crackdown on portions of its formerly high-flying tech industry. China represents about 40% of AAXJ’s portfolio and so the ETF is vulnerable to ongoing repercussions triggered by Beijing’s regulatory changes.

AAXJ Weekly Chart
AAXJ Weekly Chart

In the US Treasury market, yields continued to slide, although Friday witnessed a sizable rebound after consecutive declines in the previous four trading sessions, based on the benchmark 10-year Treasury rate.

Concerns that the US economic rebound is weaker than previously forecast has triggered a renewed run of bond buying lately. By some accounts, the downward slide in yields since April has run its course.

In any case, the 10-year rate gapped down last week, even after Friday's rebound, settling at 1.37%.

UST10Y Weekly Chart
UST10Y Weekly Chart

The decline in yields was enough to keep iShares 7-10 Year Treasury Bond (NYSE:IEF) trending higher. Although the ETF suffered a haircut Friday, for the week the fund posted another weekly advance, rising 0.6%.

IEF Weekly Chart
IEF Weekly Chart

Strategy benchmarks continue to enjoy an upside bias

Despite a mixed week for global markets, three out of four of our portfolio benchmarks posted modest gains while a fourth held steady.

The US 60/40 stock/bond portfolio continued to lead, posting a 0.3% increase for the trading week. Global Beta 16 (G.B16), which holds all the ETFs in the first table above in weights shown below, was unchanged.

Year-to-date, performance is tightening up in relative terms for the strategy benchmarks. A relatively thin 80 basis points now separates the leader from the two laggards.

Meantime, the directional bias remains bullish for all the benchmarks, based on our proprietary measure of momentum, as shown in the MOM column in the table below. The current reading is 100 across the board, the strongest bullish profile for the metric.

Portfolio Strategy Benchmarks
Portfolio Strategy Benchmarks
G.B 16 Sectors
G.B 16 Sectors
The ETF Portfolio Strategist: U.S. REITs Top Market Returns
 

Related Articles

The ETF Portfolio Strategist: U.S. REITs Top Market Returns

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
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email