XLRE ETF

A bloodbath in the US stocks after the Fed's rate-cut shift view leads to smooth trading in a few corners of the ETF investing world.

PwC Partner Andrew Alperstein joined Catalysts to talk about new trends in the commercial real estate market. He expressed excitement about the positive feedback from their survey, especially regarding the Federal Reserve's plans to cut interest rates, which he believes will lead to a stronger real estate market in 2025. Alperstein also highlighted the growing importance of data centers, driven by advancements in artificial intelligence, but warned that creating new supply is challenging due to limited power infrastructure.

REITs have shown strong performance, particularly in recent months. After correlating closely with TLT for several years, it has now significantly diverged. We look at the causes of the divergence and why XLRE remains a "buy."

XLRE offers real estate exposure for those who shy away from cherry-picking, which is an understandable approach. Unfortunately, an instrument seemingly aimed to provide diversification benefits, comes with a high holding concentration. XLRE should be accompanied by solid tailwinds, but I prefer to stick to an active approach.

The real estate sector has outperformed the S&P 500 by 8% since mid-April, driven by solid financial performance and rate-cut expectations. XLRE's portfolio structure, high dividends, low expense ratio, and robust liquidity make it a top investment option in the real estate sector. Initiating a position before a key event could help investors make healthy returns.

REITs are popular among investors, especially those seeking higher yields in the stock market. XLRE ETF holds all REITs in the S&P 500, presenting a mixed technical picture with potential for substantial gains post-Fed easing. Top 5 holdings in XLRE are profitable but overvalued, while the REIT sector offers growth potential in various sub-sectors.

REITs still offer buying opportunities amidst market volatility and uncertainty surrounding interest rate cuts. Realty Income and VICI Properties are undervalued REITs with strong upside potential and high-quality portfolios. Both REITs offer yields near 6% and strong cash flows, making them attractive long-term investments in a changing market.

On today's edition of Good Buy or Goodbye Interactive Brokers Chief Strategist Steve Sosnick breaks down two interest rate-sensitive sectors in a higher-for-longer economic backdrop. Sosnick sees the Real Estate Select Sector (XLRE) ETF as a good buy, explaining that "it's interest rate sensitive on the way in and the way out.

Real estate lags other asset classes as elevated rates continue to drag on performance. Federal Reserve indicates there is no rush to cut interest rates, creating uncertainty for real estate investors. XLRE is a large real estate ETF with diversified exposure to the sector, focusing on quality operators and excluding mortgage REITs.