Which mREITs Offer The Best Risk-Adjusted Yield For Your Portfolio?
By Parsimony Investment Research:Investors should look at several key metrics when comparing and analyzing mortgage REITs, including size (market cap), leverage profile, composition of investments (i.e., Agency vs. Non-Agency and Fixed vs. Floating Rates), and most importantly tenure and strength of the management team. All of these metrics can significantly affect the risk profile of a particular REIT.Below is a detailed overview of the largest mortgage REITs and the metrics investors should keep in mind when analyzing the space [click to enlarge images].Agency mortgages are guaranteed by government sponsored entities (implying limited credit risk). Conversely, non-agency securities do not carry a similar implied guarantee, making them inherently more risky due to the higher relative credit risk. As such, hybrid mREITs typically deploy less leverage than agency-only mREITs.mREITs with a high concentration of fixed rate securities will likely perform better if interest rates remain low, while a high floating rate concentrationComplete Story »
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