Moorebonds, what is your opinion on MFA-B?
I'm not big on any of the mREITs. I might hold my NLY for shits n grins, but wouldn't be allocating any new funds to them. If I were you, I'd dump MFA (and I might eventually shed NLY). I just don't see any of them surviving a 2% rise in short-term rates with the long-end rising maybe 1%. If Fed Funds were 3% and 30-year treasuries were 6% this might be a different story....but given where we are at now, any meaningful increase on the short-end won't likely be matched on the long-end.
And with MFA-B only yielding 7.3%....where is the risk premium? I'd much rather have a 6.5% +/- issue that is far more stable, than facing a good shot at getting wiped out with a sizable rate increase. It's just like shipping stocks - day rates may increase enough to float the industry, but it's almost a crap shoot, with a 50:50 chance of going broke or making small profits. At least with the shippers you're getting a substantial bump in yield on the perpetual ones (I still only hold the term-dated shippers because of the risk).
The only hope is that rates slightly fall or stay where they are at. While I'm not personally betting directly on that, having a good exposure to perpetual preferreds kind of makes me lean in that direction (although about 40% of my preferreds have final maturities in 25 years or less, so not as exposed to being trapped if/when rates rise, along with new money invested).
I did own REM for a few months. It's a closed-end fund investing in common shares of mREITs. I got nervous when it did a 4 for 1 reverse split when it was around 10. I figured they were doing it pre-emptively for an interest rate increase that would shave 80% of the value of the underlying mREITs, and cause them to do a reverse split when they were in the low single digits.
Because who does a reverse split when you're at $10/share?
Yeah, before Moorebonds got married, he usually responds within minutes.
Guess he had to go help his wife with the laundry, lol. And learn how to use dryer sheets.
She actually does the laundry (thankfully). The kitchen, however, remains mostly my domain. Again, thankfully.
This isnt the Moorebonds, I know... Marriage just totally neuters some people, lol.
How dare you say that?!?!? I am the man of the house. I call the shots.
Whatever I say, goes (as long as it's approved by the wife).