3 ms·

What REITs do you like? What are the most pressing risks you see with REITs right now?

• smartician 13y ago
  If I could only buy one, I would choose RWO. Relatively low fee (0.5%), both domestic and international exposure. But it "only" yields 3.75%. For more of an income play I'd look at IGR (yields more than 6%, trades at a 7.5% discount currently). Another one I'm watching is "O". Risks: Prices can swing wildly due to any number of reasons. Rising interest rates can depress real estate prices in the near term. Income should stay fairly stable though in my opinion, so I'm taking the long term view and try not to obsess about daily price volatility. I wouldn't put more than 5-10% of my capital into REITs.
  • tocomment 13y ago
    Thanks. What do you think of PMT? I can't get past the 11% yield. I guess there are some pretty big risks there to justify that yield?
    • smartician 13y ago
      Looks like PMT is an mREIT (mortgage REIT), so instead of physical properties they buy mortgage loans. Different ballgame in the same stadium, so to speak. There are others: AGNC yields 20%, CYS 16%. I used to have an ETF that holds a portfolio of these (REM), which might be a good way to diversify as they all have slightly different strategies for investing and hedging. I got out recently, it's just too unpredictable. These funds achieve their high yield by being leveraged 10x-20x, so any impact from external factors like interest rate spread and policy changes is highly amplified. Though I still have some exposure to the sector through other funds like AWP and SDIV.