A generic image of a person holding dollar bills.
Markets

Beat The Market Twice With These 2 Leading Sector Plays

A generic image of a person holding dollar bills.
Shutterstock photo

A pair of mortgage ETFs holding big-gainer Annaly Capital Management ( NLY ) remain in buy range after recently hitting their highest levels in more than two years.

First up is iShares Mortgage Real Estate Capped ( REM ), which cleared a 47.79 flat-base entry last week. It's holding just above the buy point. Shares rose nearly 9% from a breakout early this year to the start of the most recent base in late April.

[ibd-display-video id=449449 width=50 float=left]The $1.4 billion fund tracks the FTSE Nareit All Mortgage Capped Index. It's outperformed the S&P 500 this year through June 21 with a 16.3% return vs. the benchmark index's 9.9% gain, according to Morningstar Inc. But it's lagged the S&P 500 over the longer haul with three- and five-year average annual returns of 9% and 8.9%, respectively, vs. 9.8% and 15.4% for the S&P.

Real estate investment trusts are often popular with investors because of their high dividend yield. The fund's annualized payout is 9% of its current price, well above the S&P 500's average 1.9% yield. Its expense ratio is 0.48%.

[ibdchart symbol="REM" type="daily" size="threequarter" position="leftchart" /]

Top holdings include Annaly Capital Management, AGNC Investment ( AGNC ) and Starwood Property Trust ( STWD ). Annaly and AGNC are up more than 20% this year. REM is fairly concentrated, as the top five names accounted for about 45% of total assets. It had 33 holdings as of June 20.

VanEck Vectors Mortgage REIT Income ( MORT ) climbed past a 25.04 flat-base buy point last week and is also sitting just above the entry. The fund rose 8% from its prior breakout to the start of the flat base. The $156.3 million fund tracks the Market Vector Global Mortgage REITs Index.

Annaly Capital, AGNC and Starwood Property are also among its top holdings. Other top names include New Residential Investment (NRZ) and Blackstone Mortgage Trust (BXMT). The ETF is also a bit top heavy, with about 40% of its assets in the top five holdings.

[ibdchart symbol="MORT" type="daily" size="threequarter" position="leftchart" /]

Like REM, MORT has outpaced the S&P 500 year to date and underperformed the benchmark index for the three- and five-year periods. The ETF offers an annualized yield of 7.1%. It carries an expense ratio of 0.41%.

Let's check in on Thursday's ETF picks. IShares MSCI Italy Capped (EWI) edged lower, but continues to find support at its 50-day moving average line. Columbia Emerging Markets Consumer (ECON) was up slightly and staying close to its 50-day line.

RELATED:

Which Of These 2 Foreign Stock Plays Owns This Top Beer Maker?

2 Big Dividend Plays Near Buy Point; Which One Owns Microsoft?

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AGNC NLY REM MORT STWD

Other Topics

ETFs