The Zacks REIT and Equity Trust Industry has reported subpar earnings for second-quarter 2023. Among the 29 companies that have reported so far, 45% failed to beat the Zacks Consensus Estimate. However, the industry has added 4.32% over the past month (as of Aug 10).

This has put mREITS ETFs such as — VanEck Mortgage REIT Income ETF MORT and iShares Mortgage Real Estate ETF REM — in focus.

Below, we highlight the Q2 results from these companies.

Annaly Capital Management (NLY)

On Jul 26, Annaly Capital reported second-quarter earnings available for distribution (EAD) per average share of 72 cents, which surpassed the Zacks Consensus Estimate of 69 cents. The figure declined from $1.22 in the year-ago quarter.

Net interest income (NII) was negative $31.96 million against the Zacks Consensus Estimate of $262 million, plunging year over year from $475.1 million.

According to ANNALY’s management, the company has proactively navigated market volatility by skilfully adjusting leverage amid regional banking challenges and debt ceiling talks. Despite considerable market turbulence, they have achieved a solid 6% economic return in the first half of the year, showcasing the resilience and success of our diverse housing finance approach.

AGNC Investment (AGNC)

On Jul 24, AGNC Investment reported second-quarter 2023 net spread and dollar roll income per common share of 67 cents, which beat the Zacks Consensus Estimate of 58 cents. However, the bottom line declined 19.3% from the prior-year quarter.

Adjusted net interest and dollar roll income of $493 million remained flat with the quarter-ago levels. The company reported second-quarter comprehensive income per common share of 32 cents against the prior-year quarter’s loss of $1.34.

AGNC’s net interest income was negative $69 million against $315 million in the year-ago quarter. The Zacks Consensus Estimate was pegged at $342 million.

During the second quarter, improved asset yields bolstered AGNC’s performance. To effectively manage the shift in monetary policy, the company strategically aligned itself by carefully selecting assets and making timely portfolio adjustments. Moving ahead, investments in agency MBS are expected to generate appealing risk-adjusted returns.

ETFs in Focus

VanEck Mortgage REIT Income ETF (MORT)

VanEck Mortgage REIT Income ETF tracks the performance of the MVIS Global Mortgage REITs Index with a basket of 26 securities. The fund has gathered an asset base of $217.42 million and charges an annual fee of 0.41%.

VanEck Mortgage REIT Income ETF has allocations to NLY and AGNC with an exposure of 12.23% and 7.85%, respectively. NLY has the top allocation in the fund. MORT has a Zacks ETF Rank #5 (Strong Sell) with a Medium risk outlook. It has added 3.22% in the past month (as of Aug 10).

iShares Mortgage Real Estate ETF (REM)

iShares Mortgage Real Estate ETF seeks to track the performance of the FTSE NAREIT All Mortgage Capped Index with a basket of 32 securities. The fund has amassed an asset base of $648.26 million and charges an annual fee of 0.48%.

iShares Mortgage Real Estate ETF has allocations to NLY and AGNC with an exposure of 16.80% and 9.77%, respectively, with NLY being the top allocation of the fund. The fund has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook. REM has added 3.46% in the past month (as of Aug 10).

AGNC Investment Corp. (AGNC): Free Stock Analysis Report

Annaly Capital Management Inc (NLY): Free Stock Analysis Report

VanEck Mortgage REIT Income ETF (MORT): ETF Research Reports

iShares Mortgage Real Estate ETF (REM): ETF Research Reports

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Zacks Investment Research

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