REM iShares Mortgage ETF: High Yield, Diversified Income Play
REM, the iShares Mortgage Real Estate Capped ETF, is a significant player in the market with $595 million in assets under management. It offers exposure to residential and commercial mortgage real estate, with an average daily trading volume of $11 million and a tight bid/ask spread of 6 basis points.
REM's portfolio is diversified across 31 holdings, with the top 10 making up 70% of the total weight. The fund's largest holding is Annaly Capital Management REIT (NLY), at 19.14%, which pays a distribution rate of $2.80 per share, yielding 13.85%. AGNC Investment REIT (AGNC) is the second-largest holding, at 15.01%, with a distribution rate of $1.44 per share, yielding 14.71%.
REM has an expense ratio of 48 basis points and offers a robust quarterly distribution rate, annualized at $1.99 per share, yielding 9.05%. The fund was launched on May 1, 2007, tracking the FTSE Nareit All Mortgage Capped Index. It caters to long-term income investors, tactical investors, and macro traders.
REM's high yield and diversified portfolio make it an attractive option for income-focused investors. However, it's important to note the fund's risks, including lack of defensive positioning, concentration risk, distribution uncertainty, and sensitivity to mortgage rates today. Despite these risks, REM's strong performance and broad appeal make it a notable choice in the mortgage real estate ETF space.
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