3 REITs Yielding 15% And 2 To Avoid
By Todd Johnson:Agency and non agency mortgage real estate investment trusts (mREITs) are offering 15.0% and up yields. This is a tremendous interest rate yield compared to the Treasury Bond market. A 10 year Treasury Bond, as of February 10th, yields 1.96%. However, investors must recognize the risks associated with owning mREITs to determine if they are appropriate for their personal portfolios. In this article I will highlight 3 mREITs to buy and 2 to avoid.
Agency mREITs are in reality levered bond funds. The mREITs have risk control teams to hedge their positions. The agency entities borrow at short term repurchase agreement rates. Agency mREITs use these funds to purchase mortgage securities issued or guaranteed by U.S Government agencies or U.S. Government sponsored entities. These entities include Fannie Mae, Freddie Mac, and Ginnie Mae. The U.S. Federal Government has an implicit 100% guarantee on these pass through securities. TheComplete Story »