Markets Cool In November: Real Estate Takes The Lead

November 2025 saw modest moves across asset classes with U.S. real estate leading the pack, rising 2.37% for the month and up 5.75% year-to-date. Managed futures continued a recovery, advancing 0.24%—its fourth consecutive positive month—while most other asset classes posted small positive returns. The note, provided by Attain Capital's Jeff Malec, reads as a market recap rather than a driver of new asset-allocation shifts, and includes standard disclaimers on hypothetical managed futures performance.

Analysis

Market structure: November’s +2.37% lift in U.S. real estate (and +5.75% YTD) favors REITs, large-cap homebuilders, building-material suppliers and mortgage lenders through higher NAV and refinancing activity; short‑term winners are dividend‑yield strategies and closed-end funds that trade on NAV spreads. Losers include long‑duration growth names and fixed‑income proxies if real‑asset demand compresses yields; expect incremental pricing power for landlords in tight metros where new supply remains 6–12 months lagged behind demand.

Risk assessment: Key tail risks are a sudden rate repricing (10‑yr > 4.25% within 60 days), a macro slowdown that hits rents/occupancy (-200–300 bps vacancy shock), or regulatory moves on housing finance that widen MBS spreads >50 bps. Immediate (days) reaction will be momentum-driven; short‑term (weeks/months) depends on CPI, payrolls and housing starts; long‑term (quarters) fundamentals (cap rates, construction pipeline, demographic demand) drive sustained returns.

Trade implications: Favor income + selective growth in real estate while hedging rate sensitivity: use ETFs (VNQ), select builders (PHM, DHI) and commodity suppliers (LYB, PKG) sized to 1–3% positions; hedge convexity via short-duration paper or buy puts on mortgage REITs. Options: use 3–6 month call spreads on VNQ to capture upside while limiting capital; set explicit triggers around 10‑yr yield >4.25% or VNQ down 7% to cut.

Contrarian angles: The rally looks flow‑driven (yield search) not fully fundamental; consensus may underprice rate vulnerability and new‑supply lag reversal. Historical parallels (post‑peak rate rallies that rolled over) argue for hedging; crowded REIT longs could force sharp reversals if liquidity tightens or Fed surprises on tightening.

Key Decisions for Investors

• Establish a 2.5% long position in VNQ (Vanguard Real Estate ETF), scale in over 2 weeks, target +8–12% over 6–12 months; stop-loss at -7% from cost and re-evaluate if 10‑yr UST > 4.25%.
• Add a 1–1.5% long concentrated position in homebuilders (split PHM and DHI) via stock or 3‑month 5% OTM call spreads; trim if housing starts rise >10% month-over-month or builder margins compress by >200bps on quarterly reports.
• Initiate a 1% short/macro hedge in mortgage REITs (e.g., NLY) or buy 2‑month puts if 10‑yr UST rallies above 4.25% or MBS-Treasury spread widens >50bps; take profit if spreads tighten below 25bps.
• Increase systematic/CTA exposure by +1% of AUM (capped at +3%) if managed‑futures composite posts two more consecutive positive months (60 days), taking profits if 3‑month rolling return turns negative.
• Implement a pair trade: long VNQ (1.5%) / short QQQ (1.0%) to capture relative value if risk‑on continues; unwind if tech earnings beat by >10% consensus or VNQ underperforms QQQ by >8% over 30 days.