Looking for REITs? Yes, real estate has had a difficult time so far this year amid rate hikes. The right REIT ETF can help, however, still offering the benefits of REIT exposure while mitigating the downsides. Some REIT strategies even limit exposure to mortgages themselves, helping reduce some of the impact of rising rates. That can make REITs’ current income as well as their diversification benefits a very intriguing prospect indeed in an ETF like RDOG.
Recent analysis from a Bank of America strategist suggested that if the U.S. economy does avoid a recession, now could be a good time for investing in REITs. The strategist, Michael Hartnett, noted that establishing long positions in REITs now could make sense, in that case. In fact, per Hartnett, one of Bank of America’s short term contrarian positions is to go long on REITs and short bonds.
Real estate traditionally offers investors a long term source of diversification and income. REIT ETFs can be much more maneuverable, however, providing a flexible option for dipping into and out of real estate. One strategy that offers an intriguing spin on the space, the ALPS REIT Dividend Dogs ETF (RDOG), could appeal to investors.
See more: “Q&A With SS&C ALPS Advisors Chief ETF Strategist Paul Baiocchi“
RDOG applies the “Dogs of the Dow” dividend approach to REITs themselves. RDOG chooses the five best dividend-yielding REITs across nine equally-weighted REIT segments. Crucially, however, RDOG avoids mortgage REITs, thereby limiting its exposure to interest rates. Given that the Fed has raised rates at a pace not seen in decades, that could help RDOG step up.
The strategy has also sent a small but telling technical buy signal in the last few days, per YCharts. RDOG’s price rose above its 50-day Simple Moving Average (SMA) as of August 30th. Charging 35 basis points (bps), the strategy has returned 5% over the last week per ETF Database. For investors looking at REITs, RDOG could be a worthwhile option to follow.
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for RDOG, for which it receives an index licensing fee. However, RDOG is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of RDOG.
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