Tactical Portfolio Pick – Market Vectors REIT Income ETF
The worst is over
► Real estate sector becomes increasingly attractive.
► MORT wraps perfectly the whole sector.
Welcome back to Sector Scout, an ETF Radar showcase for sector ETF opportunities. This month, my sector pick is the Market Vectors REIT Income ETF (MORT). This ETF is in the Real Estate Sector. It captures mortgage REIT income. They borrow short and lend long. They also make use of leverage to increase returns. These investments have been doing well lately due to the lowered expectations of the global economy. As long as rates stay low, returns look good for these investments. They have also benefited from the price increases on the 10 year treasuries. So the main risk here is a rise in rates which would increase the cost to borrow for these REITs. The fund has returned over 14% for the year through June 11 compared to over 5% for the S&P 500.
Market Vectors REIT Income ETF tracks the performance of Mortgage REITs. This fund was launched on August 11th 2011. It has an expense ratio of 0.40%, assets over $45 million, average daily trading volume of 21 thousand shares and a yield of 12.67%. The fund’s top holdings include Annaly Capital M NLY, American Capital Agency Corp Agnc, MFA Financial Inc MFA, Two Harbors Investment Corp Two, Hatteras Financial Corp HTS, Capstead Mortgage Corp CMO, Cypress Sharpridge Investment CYS, Chimera Investment Corp CIM, Invesco Mortgage Capital IVR and Starwood Property Trust Inc STWD.
David Cohne, is Senior Advisor, Investment Strategy at ETF Radar. You can reach him directly under davidcohne [at] etfradar.com