On one hand, prospectively rotating into REITs specifically fits our macro playbook heading into the quarter (and STILL does). #HaveRatesPeaked is one of our Q3 "Macro Themes," and when we rolled out the deck on 6/28, REITs (VNQ is one vehicle) were smack dab in the middle of our investment conclusions page. On the other hand, the sector has had quite a run over the last 3 months, particularly if you care about volatility-adjusted performance...
...When looking at sector dispersion among S&P 500 sectors we look at the Vanguard Real-Estate REIT ETF (VNQ) in place of the SPDR Real Estate ETF (XLRE). VNQ has more history and deeper markets…VNQ is a +474bps total return outperformer against SPY in the last 3 months, and relative performance has been particularly good on a volatility adjusted basis which is an important complement to last price in our process.