Steve Sage

The week ending December 24, 2015, reaped positive results for all of the mortgage REITs. The VanEck Vectors ETF Trust (MORT) ended with returns of 6.1%.

REITs have become a popular investment tool to provide limited-time exposure to real estate for investors who cannot make significant investments.

Analysts on Wall Street seem quite positive about the Weyerhaeuser and Plum Creek Timber securities. Eleven analysts are in support of buying the former.

Retail REITs were the top performers of the iShares US Real Estate ETF (IYR) on January 5, 2016, with a return of 2.5%. The healthcare REIT subgroup ended the day with a positive return of 2.4%.

China’s stock exchange wreaked havoc on the global economy for the week ended January 8, 2016. The REITs market saw a severe downturn during the week.

For the week ending December 11, the iShares US Real Estate ETF, the iShares Mortgage Real Estate Capped, and the SPDR S&P 500 ETF ended on a negative note.

It’s important to know the factors that are the driving forces of any security in general. A few factors show the impact the on RAIT Financial Trust.

Sectors with companies that usually have a high level of debt such as utilities and telecommunications are the most affected by rate hikes.

Oil prices can play a crucial part in determining the direction of REITs. Let’s talk about a few of the positives and negatives affecting REITs here.

Though the week ended Friday, January 8, 2016, wasn’t fruitful for many investors, a few REITs provided some relief to investors in the volatile market.

Specialized REITs and residential REITs within IYR generated positive returns of 0.2% and 9%, respectively, on a yearly basis.

The timber industry provides employment to over 1.4 billion people and makes products worth more than $200 billion annually.

With the growing economy and global investment horizons, investments have shifted beyond the traditional options to specialized REITs.

Industry profitability has increased mainly due to improved pricing of wireless service contracts and the strengthening of infrastructure investments.

Healthcare REITs have shown resilience in the rising rate environment. REITs will likely be hurt more in this environment since they have to incur higher expenses.

Consumer spending and the overall health of the economy are the main drivers of retail REITs. The Fed’s decision to increase the interest rate could have a positive or negative impact on spending.

Within the iShares US Real Estate ETF (IYR), mortgage and hotel and resort REITs were the worst-performing subgroups of the week.

The industry sentiment is divided when it comes to evaluating the impact of the short interest ratio. Many consider it to be an indicator of bearish sentiment.

Healthcare REITs ended the week of December 31, 2015, as the most valuable subgroup within the iShares US Real Estate ETF (IYR).

Industrial REITs are expected to pick up steam as the US economic outlook gradually improves—demand for industrial properties is tied to overall economic growth.

Industrial properties suffered a major setback during the 2008 financial crisis. The vacancy rate for industrial properties increased, and the need for new industrial buildings was close to zero.

The Federal Reserve’s decision to increase the federal funds rate by 0.25% on December 16, 2015, had minimal impact on the mortgage volume.

Residential REITs derive their revenue from rentals and apartment sales. Rising rates could increase the borrowing cost for investors. The asset’s value falls.

For the week ended December 18, the iShares Mortgage Real Estate Capped ETF returned 4%. Resource Capital and New Residential Investment were top performers.

After months of speculation regarding the much-anticipated interest rate hike, the FOMC meeting on December 16, 2015, finally ended investors’ wait.

US markets and investors might have taken the Fed’s interest rate hike positively, but it’s important to explore the future outlook of mortgage REITs.

Mortgage REITs like New Residential Investment, Chimera Investment, and American Capital Agency will witness the impact of a rate hike for the first time.

For the week ending November 20, 2015, the iShares US Real Estate ETF and iShares Mortgage Real Estate Capped underperformed the SPDR S&P 500 ETF Trust.

Plum Creek Timber (PCL) generated returns of 14.6% last week, backed by news of a merger with Weyerhaeuser (WY). WY bought PCL for $8.44 billion.

The prime reason for the increasing popularity of unrestricted bond funds is the low interest rate environment.