Is now the time for REIT's? May be

Bank of America publishes monthly global fund manager survey, while they are bullish in general, they are massively underweight REIT’s.

The REIT sector ($VNQ) has underperformed broad SPY, of course we were in raising rate regime, which collapsed the caprate and REIT’s borrowing costs were increasing, and industry has seen lot of dislocation post pandemic world.

Today’s CPI report is showing the inflation is decelerating, FED seems to be done with raising rates, and may possibly do 1 or 2 cuts to bring down the real rates. There is extreme pessimism on commercial Real estate, high 10 year rates, fund managers severely underweight, lot of things are aligning for REIT’s.

My expectation is REIT’s may rally up to the first rate cut. The recent decline of VNQ to below $80 may have been the best time to open position, got distracted with tech trades.

Generally I have used $VNQ because it is more liquid and options. But RSPR (equal weighted) has slightly outperformed as below. Not sure which way I am going to go, Index vs individual names, etc.

May be it is time to start getting some exposure. @WendyBG

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For context, Savita Subramanian, a quant analyst in Bank of America Merrill Lynch, used this survey to flag energy underweight and XLE almost doubled from that point!!! I am not expecting similar results, but a 10% return plus dividends should be nice!

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