Strength in iShares Mortgage Real Estate Capped ETF's People Pillar is partially offset by an Average Process Pillar rating, leading to a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy gets an Average Process Pillar. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and an underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Annaly Capital

AGNC Investment

Starwood Property

Rithm Capital Corp

Arbor Realty Trust

Blackstone Mortgage Trust

Apollo Commercial Real Estate Finance

Ready Capital Corp

Two Harbors Investment

PennyMac Mortgage Investment

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. iShares Mortgage Real Estate Capped ETF earns an Average Process Pillar rating. The largest contributor to the rating is the firm's five-year retention rate of 92% over the period. This fund tracks an index, which also increases its process rating. Historical data, such as Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Lastly, the process is limited by the fund's weak long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the investment results of the FTSE NAREIT All Mortgage Capped Index composed of U.S. real estate investment trusts ("REITs") that hold U.S. residential and commercial mortgages.  The fund generally will invest at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics that are substantially identical to the component securities of its underlying index. The underlying index measures the performance of the residential and commercial mortgage real estate and mortgage finance and savings associations sectors of the U.S. equity market. The fund is non-diversified. 

 The portfolio is overweight in real estate by 2.6 percentage points in terms of assets compared with the category average, and its healthcare allocation is similar to the category. The sectors with low exposure compared to category peers are consumer cyclical and financial services; however, the allocations are similar to the category. The portfolio is positioned across 37 holdings and is relatively concentrated. Specifically, 69.6% of the strategy's assets are housed within the top 10 holdings, compared with the typical peer's 59.9%. And finally, in terms of portfolio turnover, on a year-over-year basis, 28% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

iShares Mortgage Real Estate Capped ETF's strong equity team drives the strategy's Above Average People Pillar rating. There are three managers listed on the fund: Paul Whitehead, Jennifer Hsui, Greg Savage. The team is well equipped, with an average of 18 years of portfolio management experience. Together, they manage a total of 257 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares Mortgage Real Estate ETF

REM tracks a market-cap-weighted index of residential and commercial mortgage REITs.

The iShares Mortgage Real Estate Capped ETF is a safer way to get exposure to mREITs, but its returns have been outpaced by CDs since COVID. REM is a passive ETF that invests based on the FTSE Nareit All Mortgage Capped Index, which caps the weights of stocks to achieve diversification. Other Seeking Alpha contributors have given REM a sell rating, with no buy ratings since 2021. Investors should consider other options in the mREIT market segment.

REM ETF: Not The Best Play For Equity mREIT Exposure

VanEck Vectors Gold Miners ETF

VanEck Junior Gold Miners ETF

iShares North American Tech ETF

American Beacon GLG Natural Resources ETF

iShares MSCI USA Momentum Factor ETF

Nuveen Growth Opportunities ETF

Amplify Junior Silver Miners ETF

VanEck Vectors Semiconductor ETF

T Rowe Price Blue Chip Growth ETF

Direxion Daily MSCI Emerging Markets ex China Bull 2X Shares

PIMCO 25+ Year Zero Coupon US Treasury Index ETF

Hello! This is MarketWatch reporter Isabel Wang bringing you this week's ETF Wrap. After a decade of seemingly never-ending fee-cutting wars, ETF issuers raised their fees in 2023 as the landscape evolved beyond cheap index-tracking funds.

ETF issuers defied investor expectations by raising fees in 2023. They may have to keep doing it.

The iShares Mortgage Real Estate ETF is a sell for investors seeking dependable income over time. The fund has generated lower total returns compared to the market, and its dividends have declined significantly over the past decade. The fund lacks diversification, with a majority of its portfolio concentrated in just ten companies, some of which have experienced declining dividends.

REM: It Just Isn't Durable Income

Capri Holdings Ltd

SPDR S&P Regional Banking ETF

Tapestry

The former bond king doesn't like the fixed-income security that's the lynchpin of the financial world.

The former bond king, Bill Gross, says 10-year Treasury is ‘overvalued'

Apple Hospitality REIT

Brookfield Corp

Brookfield Property Partners L.P. - 6.375% PRF PERPETUAL USD 25 - Cls A Ser 2

Brookfield Property Partners L.P. - 6.50% PRF PERPETUAL USD 25 - Ser 1 Cls A

Boston Properties

Diversified Healthcare Trust

Franklin BSP Realty Trust Inc

Granite Point Mortgage Trust

Hannon Armstrong Sustainable Infrastructure Capital

Highwoods Properties

Invesco Mortgage Capital

Medical Properties Trust

Pebblebrook Hotel Trust

Park Hotels & Resorts

Chicago Atlantic Real Estate Finance

Rayonier

TPG RE Finance Trust

Vici Properties

Vornado Realty Trust

Veris Residential

U.S. equity markets extended their winning streak to an eighth week - the longest in five years - after inflation data both domestically and abroad showed a further cooling of price pressures. Extending its weekly winning streak to the longest since 2017, the S&P 500 posted gains of another 0.9% on the week, lifting the benchmark to within 1% of record highs. Pushing their eight-week rebound to over 25%, the Equity REIT Index gained 0.6% this week, with 9-of-18 property sectors in positive territory, while the Mortgage REIT Index gained 1.3%.

Disinflation: A Gift That Keeps Giving

iShares Core U.S. REIT ETF

Vanguard Real Estate ETF

Investing directly in real estate properties requires a large amount of capital and many other resources that most average investors cannot access. But, for investors looking to gain exposure to the real estate market and the many benefits of real estate investing, REITs (real estate investment trusts) are the way to go.

3 REIT ETFs to Buy for Massive Long-Term Gains

Apple

Alerian MLP ETF

Cisco Systems

Microsoft

Oracle

Schwab U.S. Large-Cap Growth ETF

SPDR S&P Dividend ETF

SPDR S&P 500 ETF Trust

Stock prices and returns are in part determined by net cash on the balance sheet and future expectations of free cash flow. Dividends are not a driver of valuation and actually decrease the value of a company because cash is paid out to investors. Over the past decade, dividend-paying stocks have underperformed compared to "growth" stocks with strong free cash flow generation and balance sheets.

The Underperformance Of Dividend-Only-Focused Strategies

Housing market may face trouble due to high mortgage rates and a potential recession, making iShares Mortgage Real Estate Capped ETF a risky investment. The REM ETF offers high dividend yield, exposure to U.S. real estate sectors, and strong liquidity, making it attractive for income-focused investors. However, REM's portfolio mainly consists of high-risk mortgage REITs, is sensitive to interest rate fluctuations, and has concentration risk.

REM: In The Wrong Part Of The Cycle

Fidelity MSCI Real Estate ETF

First Trust S&P REIT Index Fund

Hoya Capital Housing ETF

iShares Cohen & Steers REIT ETF

Pacer Benchmark Industrial Real Estate SCTR ETF

iShares U.S. Home Construction ETF

iShares U.S. Real Estate ETF

Janus Henderson U.S. Real Estate ETF

Invesco KBW Premium Yield Equity REIT ETF

VanEck Mortgage REIT Income ETF

Direxion Daily Homebuilders & Supplies Bull 3X Shares

Nuveen Short-Term REIT ETF

Invesco Dynamic Building & Construction ETF

US Diversified Real Estate ETF

Invesco Active US Real Estate

iShares Global REIT ETF

iShares Residential Real Estate ETF

IQ US Real Estate Small Cap ETF

Invesco S&P 500 Equal Weight Real Estate ETF

SPDR Dow Jones REIT ETF

Schwab U.S. REIT ETF

Global X SuperDividend REIT ETF

Pacer Funds Trust-Pacer Benchmark Data & Infrastructure Real Estate Sector ETF

SPDR S&P Homebuilders ETF

Real Estate Select Sector SPDR Fund

Alpine Global Premier Properties Fund

JPMorgan BetaBuilders MSCI US REIT ETF

DoubleLine Commercial Real Estate ETF

First Trust Alerian Disruptive

iShares International Developed Real Estate ETF

CBRE Global Real Estate Income Fund

Invesco Real Assets ESG ETF

NETLease Corporate Real Estate ETF

ALPS Active REIT ETF

SPDR Dow Jones Global Real Estate ETF

SPDR Dow Jones International Real Estate ETF

Vanguard Global ex-U.S. Real Estate ETF

iShares International Developed Property ETF

The history of construction spending since 1993 reveals that this data tends to weaken prior to recessions. For a recent dip in Residential Construction attributed to the rise in mortgage rates, this indicator is charging higher.

Construction Spending Rises

iShares Core U.S. Aggregate Bond ETF

SPDR Bloomberg 1-3 Month T-Bill ETF

iShares Global Clean Energy ETF

iShares MSCI Saudi Arabia ETF

SPDR S&P North American Natural Resources ETF

First Trust NASDAQ Clean Edge Green Energy Index Fund

Invesco Solar ETF

iShares 20+ Year Treasury Bond ETF

Global X Uranium ETF

United States Oil Fund LP

Hello! This week's ETF Wrap digs into where investors put their money in October, and how November is shaping up in markets after the Federal Reserve's decision on interest rates.

Short-term bonds dominate fixed-income ETF flows again in October — with a single fund getting outsize portion of investors' money

With high interest rates and the increased probability of the Fed remaining hawkish for longer, look into how mREITS ETFs are affected after Q3 earnings results.

What Do Mortgage REIT Earnings Hold for ETFs?

Agree Realty

Crown Castle International

iShares CMBS ETF

Dynex Capital

Equity LifeStyle Properties

Farmland Partners

First Industrial Realty Trust

iShares MBS ETF

Orchid Island Capital

Alpine Income Property Trust

Prologis

Rexford Industrial Realty

Sculptor Capital Management

Seven Hills Realty Trust

Tanger Factory Outlet Centers

SL Green Realty

Sun Communities

Terreno Realty

U.S. equity markets remained turbulent while benchmark interest rates retreated as investors weighed shocking geopolitical developments in the Middle East against inflation data showing an energy-driven reacceleration in price pressures. Posting a second week of modest gains following a four-week skid, the S&P 500 advanced 0.5%, but gains remained "top-heavy." The Mid-Cap 400 and Small-Cap 600 each posted weekly declines.

Different World, Same Problems

VanEck Vectors BDC Income ETF

iShares Emerging Markets Dividend ETF

Two iShares ETFs are on the list, one focused on real estate and the other on emerging markets. VanEck's ETF, which owns positions in BDCs, has delivered an especially impressive total return this year.

These 3 ETFs Offer Ultra-High-Dividend Yields of 10% or More. Are They Buys?

Mortgage rates have reached a 20-year-high, increasing borrowing costs in the real estate market. The iShares Mortgage Real Estate Capped ETF has a hold rating due to its high yield and strong liquidity, but there are significant risks including concentration and seasonality. REM has a concentrated portfolio, with the top four positions comprising over 40% of the portfolio, and tends to perform well in November and December.

REM: 10%+ Yields Investing In Mortgages, But Know The Risks

Alphabet

Realty Income Corp

A myopic focus on dividends may be costing investors 2%-4% in returns per year. Dividend Aristocrats and high-yielding companies have trailed the market-cap weighted S&P 500 in the past 10 years. Understanding the cash-based sources of intrinsic value and focusing on total return rather than just dividends can lead to better investment outcomes.

You Trailed The Market Betting On REITs, Now What?

Data extracted from all of VettaFi's digital properties from the data and analytics tool Explorer indicate that investor interest in real estate ETFs has remained steady in the past three months. VettaFi's LOGICLY tool allows us to examine some of the leading ETFs in the U.S. real estate space.

Real Estate ETFs: The Top Funds in the Sector

After Q2 earnings look into how mREIT ETFs have performed.

Mortgage REIT Q2 Earnings Put ETFs in the Spotlight

Dividend payments reduce the intrinsic value of a company and its stock price, as they decrease the net cash on a company's balance sheet. High yield dividend investing can erode capital over time, and dividend growth investing has underperformed in the past decade. Investors should understand that dividends are not incremental to returns and are not independent of the stock price.

A Focus On Dividends May Be Hurting Many Retirement Accounts

Alexandria Real Estate Equities

Blackstone Group

Direxion Daily Real Estate Bull 3x Shares

Direxion Daily Real Estate Bear 3x Shares

Extra Space Storage

Nuveen Real Estate Income Fund

KKR Real Estate Finance Trust

Life Storage

Neuberger Berman Real Estate Securities Income Fund Inc

Healthpeak Properties

Regency Centers

ProShares Short Real Estate

Real estate earnings season kicks into gear this week, and over the next month, we'll hear results from 175 equity REITs, 40 mortgage REITs, and dozens of housing industry companies. Real estate equities - the sector with perhaps the most to gain from a moderation in inflation and normalization in Fed monetary policy - enter earnings season with wind in their sails. Obscured by macro headwinds, REITs delivered a solid first quarter of earnings results fueled by buoyant rent growth. This report discusses the major high-level themes we'll be watching across second quarter results.

REIT Earnings Preview: Here's What We're Watching

Defiance Hotel Airline and Cruise ETF

US Global Jets ETF

Global X MSCI Nigeria ETF

SPDR S&P Transportation ETF

June was an impressive month for Wall Street. The three major indexes posted decent gains.

Top-Performing ETF Areas of June

iShares Mortgage Real Estate Capped ETF invests in all major mortgage-based real estate investment trusts, and generates strong yields, averaging in double-digits over a long-term horizon. REM is a top-heavy fund (60 percent of assets invested only in 7 stocks) with a relatively high-risk profile. Fund is more volatile than the overall market. As interest rates have moved up, there lie strong opportunities for mREITs. The residential real estate sector has also started posting strong recoveries.

REM: High-Yielding MREIT Fund Suitable For Income-Seeking Investors

REM is an ETF focusing specifically on Mortgage REITs. The fund has a long history of underperformance, and there is little reason to expect this to change. The fund even underperformed all 8 of its top holdings anywhere from 15% to 95% in the last decade.

REM: I Don't See The Appeal In This Underperforming Fund

Virtus Real Asset Income ETF

U.S. equity markets climbed to their highs of the year as investors took positions ahead of a critical slate of inflation data and an anticipated "pause" in the Fed's rate hike cycle.

Fed Looms Over New 'Bull Market'

Wall Street experts differ in their outlooks for America's housing market.  Wharton professor Jeremy Siegel, real estate tycoon Jeff Greene, and others have warned that home prices will drop, while others like "Shark Tank" star Barbara Corcoran are more optimistic.

Wall Street is divided on the outlook for US house prices. Here's what 6 experts have recently said.

News for iShares Mortgage Real Estate ETF ETF (REM)