Investing directly in the real estate sector may appear to be an expensive proposition for most investors. This is where mutual funds come in, offering a cost effective method of investing in this industry. Real estate funds also offer significant protection against inflationary pressures. Research has shown that they perform better on this front compared to gold and other precious metals. Including funds from this sector in a well diversified portfolio helps increase returns while reducing the risk factor as a whole.
Below we will share with you 5 top rated real estate mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.
T. Rowe Price Real Estate (TRREX) invests a large share of its assets in companies from the real estate sector. Not more than 20% of its assets may be invested in companies which generate a significant part of their revenues by servicing real estate companies. The real-estate mutual fund has a ten year annualized return of 11.46%.
As of September 2010, this real-estate mutual fund held 37 issues, with 9.49% of its total assets invested in Simon Property Group, Inc.
ING Real Estate A (CLARX) seeks long term capital growth and current income. At least 80% of its assets are invested in common and preferred stocks of real estate companies and real estate investment trusts. It is non-diversified and may also invest in convertible securities and IPOs. The real-estate mutual fund returned 43.2% over the last one year period.
T. Ritson Ferguson is the fund manager and has managed this real estate mutual fund since 1996.
Neuberger Berman Real Estate (NBRFX) primarily invests in equity securities issued by real estate investment trusts. It also invests in common stocks and other securities issued by companies from the real estate industry. The real estate mutual fund has a five year annualized return of 6.66%.
The real estate mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.99% compared to a category average of 1.50%.
Virtus Real Estate Securities A (PHRAX) seeks invests heavily in real estate investment trusts which are publicly traded. The fund’s other major investments include companies whose principal operations are related to the real estate sector. The real estate mutual fund has a ten year annualized return of 11.79%.
Geoffrey Dybas is the fund manager and has managed this real estate mutual fund since 1998.
Goldman Sachs US Real Estate A (GREAX) utilizes at least 80% of its assets to purchase equity securities of companies from the real estate sector or those with linkages to the industry. The real-estate mutual fund returned 40.45% over the last one year period and has a five year annualized return of 2.06%.
The real estate mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.44% compared to a category average of 1.50%.
To view the Zacks Rank and past performance of all real estate mutual funds, then click here.