Top 5 Real Estate Mutual Funds (Feb. 2011)

Investments in the real estate sector are expected to provide excellent protection against inflationary pressures. This is why they should necessarily be part of portfolios with a long term horizon and aid in diversification. Additionally, they lend stability to a portfolio, despite the difficult phase real estate has passed through recently. This is because the volatility in property prices is far less compared to the kind experienced by stocks over the longer term. Real estate funds offer a cost effective and convenient method of holding these investments.

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.

Forward Strategic Realty A (KSRAX) seeks total return. The fund invests the majority of its assets in real estate securities. These may be issued by real estate investment trusts or companies operating in the sector. The real-estate mutual fund returned 33.34% over the last one year period.

The real estate mutual fund has a minimum initial investment of $4,000 and an expense ratio of 0.84% compared to a category average of 1.49%.

Fidelity Real Estate Income (FRIFX) invests heavily in preferred and common stocks of real estate investment trusts. Debt securities of real estate companies as well as related asset backed securities constitute its other major investments. The real estate mutual fund has a three year annualized return of 6.36%.

As of October 2010, this real estate mutual fund held 344 issues, with 6.29% of its total assets invested in Fidelity Revere Str Tr.

DWS RREEF Real Estate Securities A (RRRAX) seeks current income and capital growth over the long term. At least 80% of the fund’s assets are invested in real estate investment trusts and companies. The real-estate mutual fund returned 28.66% over the last one year period.

John W. Vojticek is the Fund Manager and he has been managing this real estate mutual fund since 2004.

Ivy Real Estate Securities A (IRSAX) invests at least 80% of its assets in real estate companies or companies with linkages to the sector. The fund invests in domestic and foreign securities regardless of their size or market capitalization. The real estate mutual fund has a ten year annualized return of 10.26%.

The real estate mutual fund has a minimum initial investment of $500 and an expense ratio of 2.09% compared to a category average of 1.49%.

CGM Realty (CGMRX) seeks capital growth over the long term and current income. It primarily invests in companies in the real estate sector. Up to 20% of its assets may be used to purchase securities issued by firms not belonging to the real estate sector. The real-estate mutual fund returned 29.54% over the last one year period.

G. Kenneth Heebner is the Fund Manager and he has been managing this real estate mutual fund since 1994.

To view the Zacks Rank and past performance of all real estate mutual funds, then click here.

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