Mortgage Real Estate ETF (REM) Hits New 52-Week High

Sweta Jaiswal, FRM

For investors looking for momentum, iShares Mortgage Real Estate ETF REM is probably a suitable pick. The fund just hit a 52-week high — up roughly 20.7% from its 52-week low of $40.05/share.

Does it have more gains in store? Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:

REM in Focus

The fund provides exposure to the U.S. residential and commercial mortgage real estate sectors and tracks the FTSE Nareit All Mortgage Capped Index. It charges 48 bps in fees and has an AUM of $1.57 billion  (see all Real Estate ETFs here).

Why the Move?

A dovish Fed in 2019 and very low borrowing costs are the main driving factors behind the upside. When interest rates drop, mortgage rates fall, making real estate or refinancing mortgages more affordable. This, in turn, boosts real estate sales. Meanwhile, the coronavirus outbreak is showing no signs of dying down. In fact, the number of new cases being reported outside mainland China has started to increase. South Korea and Japan have confirmed a spike in the number of confirmed coronavirus cases.  This is increasing the attractiveness of these funds as they offer outsized yields and act as good investing options, when increased safe-haven trading keep yields at check.

More Gains Ahead?

The fund has a positive weighted alpha of 16.20, which gives cues of further rally.

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iShares Mortgage Real Estate ETF (REM): ETF Research Reports
 
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