Investors hate real estate stocks — and that could be good news for the sector
The S&P 500 ‘s newest sector isn’t getting much love.
Real estate , which was broken out of the financials at the end of the summer to create an 11th distinct sector, is the most underweighted sector by active managers, according to research from Bank of America Merrill Lynch.
Not only is real estate the sector managers are least exposed to relative to their benchmarks, but it is also the sector that the smallest number of managers overweight.
Interestingly, the moderate positioning in real estate stocks could actually serve as a contrary indicator. With so little money in the group, marginal funds may flow out of heavily owned sectors like consumer discretionary and tech, and into the high-yielding real estate stocks.
In fact, the BofAML research team has found that overweighted stocks tend to outperform and underweighted to underperform; unsurprisingly, two of the three most under-owned stocks now are Realty Income Corp . and Federal Realty Investment Trust , they found.
It is no secret that the yield environment has served as the major problem for real estate names. Bond yields have recently risen substantially, hurting these high yielding stocks. And with the Federal Reserve expected to continue to raise rates in 2017, few appear to see a powerful reason to buy.
« This is an interest-rate sensitive sector, and that scares away a lot of investors, » commented Chad Morganlander, portfolio manager at Stifel Nicolaus.
Still, Morganlander is not one of those managers who is underweighting real estate.
« We believe that overall for 2017, this sector is going to catch a bid, and we would be buyers here, » he said Tuesday on CNBC’s » Trading Nation. »
He advises keeping it simple. Rather than picking individual real estate investment trusts, « I would just go out and buy the actual ETF and I wouldn’t go into specific names. I think you have a broad-based win by allocation 3 to 5 percent to the real estate sector in one’s portfolio. »
The Real Estate Select SPDR Fund ( XLRE ), which tracks the sector, offers a dividend yield of nearly 4 percent. However, the amount of diversification it offers is limited; the ETF tracks just 29 stocks, and the two largest ( Simon Property Group and American Tower ) make up more than 18 percent of the fund.
© Source: http://www.cnbc.com/2017/01/04/investors-hate-real-estate-stocks–and-that-could-be-good-news-for-the-sector.html
All rights are reserved and belongs to a source media.
President-elect Donald Trump can influence stock prices and change corporate plans simply by tweeting, and few companies are as dependent on the government as the big contractors.
Global shares rose Wednesday as gains in the U. S. and Asian markets carried over into European trading. The Tokyo benchmark jumped in the opening day for 2017, helped by a weak yen.
Today is Wednesday, Jan. 4, the fourth day of 2017 with 361 to follow.
The 67th Berlin International Film Festival will open with the world premiere of Etienne Comar’s jazz biopic “Django.”
Chicago has yet to experience the worst that winter can dish out. But the newly announced schedule of the Grant Park Music Festival’s 2017 season should offer some comfort, enabling audiences to start dreaming about warm summer nights in Millennium Park, and the joys of 30 free concerts performed on the stage of the Jay Pritzker Pavilion from June 14 – Aug. 19.
At CES 2017 in Las Vegas this week, technologists and marketers are showing off products claiming to solve problems and make our lives easier.
You might fairly ask if I’d have given four stars to “Bright Lights: Starring Carrie Fisher and Debbie Reynolds” if this iconic mother-daughter team hadn’t died within a day of one another last week.
NEW YORK , Jan. 4, 2017 /PRNewswire-USNewswire/ — A short film on YouTube revealing similarities between terrorism and organized crime has won attention across the Arab world and the West. Titled « Outside the Box, » it shows how techniques used successfully to weaken the mafia through civil society can also be applied to groups like ISIS.