REIT ETF

One of 2024's more significant stories, data center construction boomed amid a blockbuster year for AI. AI is not likely to go away anytime soon and with Federal deregulation of areas like crypto likely amid broader positive macro trends, data center construction could continue to grow.

Investors looking to position for a 2025 uptick in M&A activity have many sectors to choose from. Real estate, including REITs, is a credible contender to experience more consolidation activity next year.

Real estate stocks and related ETFs recently got a much needed positive jolt when the Federal Reserve lowered interest rates in September. The sector's rate-sensitive status isn't going anywhere.

Expectations the Fed would cut interest rates in September supported gains for REITs and related ETFs. But publicly traded real estate assets endured some profit-taking following the Fed's first rate cut in four years.

Real estate stocks and the related ETFs are notoriously rate-sensitive assets. It's not surprising that the run up to and the delivery of the Federal Reserve's rate cuts were beneficial to the sector.

Rate cuts have come and gone and with that change, many investors may be reevaluating portfolios for the end of the year. In equities, big tech names still lead the way, while in fixed income, dropping rates could change the outlook.

One of the primary reasons investors tap real estate investment trusts (REITs) and the related ETFs is due to the above-average dividend yields typically found on these assets. That trait also makes real estate stocks rate-sensitive.

The real estate sector has been hamstrung this year as the Federal Reserve has yet to deliver widely hoped for interest rate reductions. Those are the breaks for rate-sensitive groups such as real estate.

Real estate investment trusts (REITs) and related ETFs are usually viewed as rate-sensitive instruments,  and with good reason. Much of that boils down to real estate being a capital-intensive endeavor.