As equity markets struggle to decide whether or not to like Operation Twist, bond markets have clearly pronounced in favor. For clients with a riskier—but not suicidal—flair, ETFs are one way to take advantage of what the Fed has to offer.
According to Ari Weinberg of Smart Money, a strong bet on the Federal Reserve’s latest move involves ETFs that owns residential and apartment real estate investment trusts.
“So far this year, interest in the 27 exchange-traded funds that invest in REITs has been tepid,” Weinberg writes. “But there’s reason to believe that could change. The Fed’s decision last week to launch Operation Twist is aimed at lowering longer-term rates to encourage longer-term investments, including equipment and property. While certain sectors of the real estate market like office and commercial space are more volatile, residential and apartment REITs may play right into the Fed’s hand.”
He notes there are other reasons to like residential REITs.