Matt Reiner was recently quoted in Market Watch, a Wall Street Journal blog, in a review about mortgage REIT funds.
As investors are desiring higher yields, some are taking note of two exchange-traded funds focused on real estate investment trusts that trade mortgage-backed securities. These funds are yielding high return, but do come with serious risks.
The two mortgage REITs in question are: The iShares FTSE NAREIT Mortgage Plus Capped Index Fund (REM) and the Market Vectors Mortgage REIT Income ETF (MORT). Both funds have achieved a return of more than 15% in 2012 so far.
Reiner says he’s finding enough solace in current market conditions to keep small doses of REM in client portfolios. “We’re seeing enough pros in the marketplace to balance many of the red flags on the horizon for mortgage REITs,” he adds.
“In a low-rate environment where benchmark Treasurys are yielding less than 2%, even a small tactical position in REM can help support a diversified portfolio’s income stream,” says Mr. Reiner. “But you can’t just buy a mortgage REIT ETF and walk away.
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