Two ETFs to Consider for Strong Returns in Anticipation of Interest Rate Reductions

How Falling Rates Impact ETF Performance

The Federal Reserve is expected to reduce interest rates, potentially boosting sectors like real estate and small-cap value stocks. These two ETFs could be big winners. While interest rate cuts generally benefit stocks, specific sectors stand to gain more. Real estate investment trusts (REITs) and small-cap value stocks could outperform as rates fall.

• Rising rates increase borrowing costs for REITs
• Small-cap value ETFs could benefit from cheap debt as rates fall

ETF Performance Amidst Rate Cuts

1. The Vanguard Real Estate ETF (VNQ) has fallen as rates rose, potentially poised for gains as rates fall
2. The Vanguard Small-Cap Value ETF (VBR) may see gains if interest rates decline

Regardless of timing, these ETFs could be strong long-term investments, reflecting market-beating potential during rate-cutting cycles.