It is no secret that we are in an environment where everyone is expecting rising interest rates, especially with the FOMC itself signaling that a rate raise “may be appropriate in March.”
That’s the rhetoric we have heard lately, and the expected rate hike is due on Wednesday. In that vein, we saw some late week flows into an interest rate-sensitive product, IYR, 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 MAs 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. This behemoth fund has seen more than $1.7 billion in creations in 2017 in its own right.
The 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.
IYR currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #6 of 20 ETFs in the Real Estate ETFs category.