JP Morgan Raises Redwood Trust to Overweight—What Institutional Investors Are Doing

Financial markets took notice on January 23, 2026, when JPMorgan elevated its stance on Redwood Trust, Inc. - Preferred Security (NYSE: RWTO) from Neutral to Overweight, signaling fresh confidence in the preferred stock. This rating adjustment comes with compelling upside potential that’s capturing investor attention across multiple fund families tracking fixed-income opportunities.

Strong Upside Forecast Draws Analyst Consensus

As of mid-January 2026, Wall Street’s consensus price target for Redwood Trust stands at $30.71 per share, implying a potential 22.54% appreciation from the then-current price of $25.06. The analyst community’s projections span a wide range—from a cautious $25.90 floor to an ambitious $39.81 ceiling—reflecting varied conviction levels on the preferred security’s trajectory. Beyond price appreciation, the projected annual non-GAAP earnings per share of 0.83 provides a tangible earnings foundation for dividend sustainability, a key consideration for income-focused investors.

Institutional Positioning: A Multi-Strategy Snapshot

Four major funds and institutions maintain active positions in Redwood Trust, with combined holdings reaching 461,000 shares. This institutional engagement represents a diverse set of investment philosophies, each responding distinctly to market conditions:

Preferred Stock Specialists Leading the Charge Virtus InfraCap U.S. Preferred Stock ETF (PFFA) holds the largest stake at 395,000 shares, up 8.74% from prior filings. Notably, while the fund increased absolute share count, it trimmed its relative portfolio weight in RWTO by 6.22%—a tactical rebalancing move that preserves exposure while managing concentration risk.

Income Funds Show Selective Interest InfraCap Equity Income Fund ETF (ICAP) maintains 46,000 shares with modest growth of 3.12%, coupled with a 5.74% portfolio weighting increase. Meanwhile, Ancora Income Fund Class I (AAIIX) dramatically expanded its Redwood Trust position by 66.67%—jumping from 5,000 to 15,000 shares—and more than tripled its portfolio allocation weight by 176.67%, suggesting heightened conviction from this micro-cap focused vehicle.

Bond-Focused Players Maintain Modest Stakes Infrastructure Capital Bond Income ETF (BNDS) rounded out the institutional roster with 5,000 shares, a 62.91% increase from prior holdings, though it reduced portfolio weight by 14.78% in a tactical pare-back move.

What This Institutional Choreography Signals

The divergent moves across these four positions reveal institutional nuance: while most funds are increasing absolute share counts, portfolio weight adjustments vary from aggressive expansion (AAIIX) to measured reductions (PFFA, BNDS). This pattern suggests Redwood Trust is being integrated into broader portfolio rebalancing rather than driven by unanimous conviction. JPMorgan’s upgrade to Overweight may accelerate this institutional dialogue in coming weeks.

Data sourced from Fintel’s institutional holdings tracker and analyst consensus estimates as of January 2026.