It is no secret that we are in an environment where everyone is expecting rising interest rates, especially with the FOMC themselves signaling that a rate raise “may be appropriate in March.”
That’s the rhetoric that we have heard lately, anyway, and this expected rate decision is on Wednesday of this week. In that vein, we saw some late week flows into an interest rate sensitive product, IYR (iShares U.S Real Estate, Expense Ratio 0.43%), with more than $660 million entering the fund via creation activity and adding to the fund’s asset base which is now north of $4.6 billion.
IYR has dipped extraordinarily lately, likely on expectations of rate hikes, but it appears that someone is stepping in and perhaps sensing bargains in the sector and accumulating shares of IYR, where yield has creeped up to 3.5% at current levels.
IYR experienced nine straight down sessions prior to some respite in early trading today, where it sliced through both its 50 and 200 day MA’s without a significant bounce or relief. This brings the fund back to its early February lows after rallying nicely through February before the latest sell-off.
The latest inflows have brought IYR’s net YTD flows positive, with over $500 million entering the fund thus far in 2017, but the fund still has significant ground to make up in order to catch the largest U.S. REIT based ETF in the U.S. listed landscape, which is the $33.5 billion VNQ (Vanguard REIT, Expense Ratio 0.12%). This behemoth fund has seen more than $1.7 billion in creations in 2017 in its own right.
The iShares Dow Jones US Real Estate ETF (NYSE:IYR) was trading at $76.86 per share on Monday morning, up $0.32 (+0.42%). Year-to-date, IYR has declined -0.10%, versus a 6.23% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.