"It appears that the retail investors in North America are slowly embracing more risk," Hintz says. "That is leading to money flowing into the asset managers, which is a pretty good tail wind for the trust banks." With continued evidence of sustained economic growth, although some recent economic reports have been more positive than others, investors also see the trust banks as a play on rising interest rates. "We have the trust banks all still marked as 'market perform,' but on the other hand, it certainly is looking up for the group," Hintz says, adding that "they should do very well when rates ride." The prospect of significantly higher rates weighed on the shares of large mortgage real estate investment trusts. Shares of Annaly Capital Management ( NLY) were down over 2% to close at $14.73, while American Capital Agency ( AGNC) was down over 3% to close at $29.05. Both REITs feature very high dividends, as the companies borrow at record low short-term rates, while making leveraged investments in long-term mortgage backed securities, much of which was purchased at significant discounts.
-- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn