2 Top ETFs That Could Help You Beat the Market When Interest Rates Start to Fall
While experts disagree on the timing, the overwhelming consensus is that the Federal Reserve's next interest rate move will be a cut. Even the latest projections from the policymakers at the Federal Reserve call for interest rates to be significantly lower in a year or two than they are today.
If we enter a rate-cutting cycle, it will likely be a positive catalyst for stocks in general. But there are a few areas of the financial markets that could be especially big winners.
Real estate investment trusts, or REITs, tend to be highly rate-sensitive stocks. Not only do rising interest rates increase the cost of borrowing money, which is a big part of the real estate industry, but the yields of income-focused investments like REITs tend to rise alongside the yields of risk-free instruments like Treasury bonds. Since yield and price have an inverse relationship, this puts pressure on REITs.
Source Fool.com
