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This REIT Fund Is Raking in Huge Dollars This Week

Thursday, 27 Jun 2013 | 12:52 PM ET
Manuel Gutjahr | Getty Images

Investors flocked back to real estate investment trusts this week, in a trade that looks like a search for yield and a play on a more aggressive housing recovery.

REITs had fallen out of favor in recent days as the market worried about rising yields and overbought conditions. The trusts trade like stocks and invest in real estate across a number of classes, but primarily in commercial and multi-family dwellings.

The FTSE NAREIT U.S. Real Estate Index is up just 1.84 percent in price this year, badly trailing the S&P 500 stock market index gain of 13.5 percent.

However, the index is up more than 2 percent over the past week as bargain hunters have stepped in amid rampant selling in the equity and bond markets.

(Read More: Pimco's Gross: Don't Jump Ship on Treasurys Now)

The trend has shown up most visibly in the iShares Dow Jones U.S. Real Estate exchange-traded fund, which holds a number of large REITs. Its biggest component is Simon Property Group, followed by American Tower.

By a large margin, the fund has seen more inflows than any other ETF this week.

It has taken in some $695.3 million, a trend that has completely reversed all the voluminous outflows for the year. It now has taken in $1.7 million so far this year, according to IndexUniverse.

(Read More: Why All the Bond Selling Hysteria May Be Overdone)

Rise in Rates 'a Long Way Off?'
CNBC's Steve Liesman provides the highlights from a briefing this morning from New York Fed President William Dudley, who tried to reassure markets over a potential rise in interest rates.

That influx of money comes amid a month in which investors pulled a record $61 billion from bond funds, according to research firm TrimTabs.

Though the fixed income outflows were dramatic, the month is ending with money heading back into higher-quality bond funds as investors try to gauge the Federal Reserve's next monetary policy move.

(Read More: Markets Have It Wrong on Fed's QE Policy: Dudley)

Among the top 10 this week for inflows are the SPDR Barclays Short Term Corporate Bond Fund, which has taken in $469.7 million; the SPDR Barclays 1-3 Month T-Bill, $348.1 million; and the iShares Barclays 20 Year Treasury Bond, $229.6 million.

Investors aren't sold on bonds, yet, though. The SPDR Barclays High Yield Bond fund has lost $536.8 million and the iShares iBoxx $ Investment Grade Corporate Bond fund has seen $427.1 million in redemptions.

_ By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter.

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