Looking for sky-high returns in REITs?

No one can promise you that. But it is time to look at Real Estate Investment Trusts (REITs) again, now that the rate-cutting cycle has begun.

See what our head of equities has to say about this resurgent sector below.

We also have more on policy rate cuts in the US and the Philippines from our economics research team, which recently released a new report.

Lastly, please give our podcast episode on the dollar-peso exchange rate a listen, too.

For more investment insights and ideas, please visit our website, www.wealthinsights.ph.

Happy reading to all!

You're in good hands,

Metrobank Wealth Insights Team

REIThinking: Playing the bond game in equities

Since their Initial Public Offerings (IPOs) in 2020-2021, REITs have steadily provided value for investors with their dividends. However, headwinds have materialized that dampened the sector’s prospects. The weakness in the property market brought on by mobility restrictions, a shift to work-from-home, and the waning of Philippine Offshore Gaming Operators (POGOs) and Business Process Outsourcing (BPO) companies also didn't help.?

In 2022, we advised clients to hold off on REIT investments as inflation and interest rates shifted demand to less risky fixed-income products. With a turn in policy rates, we think it’s time to revisit the sector as we see REITs becoming a strategic alternative to bonds.

Read more: REIThinking: Playing the bond game in equities

Policy Rate Views: More rate cuts ahead for US and the Philippines?

The US Federal Reserve (Fed) reduced its key interest rate, the Federal Funds Target Rate (FFR), by half a percentage point or 50 basis points (bps) to a range of 4.75% – 5.00%. This decision was made during the Federal Open Market Committee (FOMC) meeting on September 17-18. The FOMC, which is the Fed’s monetary policymaking body, recognized that job growth has slowed and that while inflation remains somewhat elevated, it has made further progress toward the Fed’s 2% target.

We have revised our forecast for the Federal Funds Rate. We now expect a total reduction of 100 bps worth of cuts for full year 2024 and another 100 bps for FY 2025. Following the recent 50-bp cut, we anticipate 25-bp cuts at each of the remaining FOMC meetings (November and December). This would bring the target FFR range to 4.25%-4.50% by the end of 2024 and 3.25% – 3.50% by the end of 2025.

Read more: Policy Rate Views: More rate cuts ahead for US and the Philippines

Rates Outlook: Buy the dips

There were three reasons why the dollar recovered last week. It may be time to buy when the dollar-peso drops.

Maria Christina “Yna” Virtudazo, Investment Counselor, Financial Markets Sector, Metrobank, talks about the factors that led to the recovery of the US dollar last week and what we can expect from the dollar-peso exchange rate in the days ahead.

Listen here: Rates Outlook: Buy the dips

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