For most investors, investing directly in the real estate sector may appear to be an exorbitant proposition. Mutual funds are one of the most convenient and cost effective methods of investing in this industry. This category of funds also offers significant protection against inflationary pressures. In fact, several studies have shown that real estate funds deliver better results on this count compared to precious metals. The presence of funds from this category in a well diversified portfolio ensures higher 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.
Dreyfus Global Real Estate Securities A (DRLAX) seeks current income and capital growth. The fund invests heavily in publicly traded equity securities of real estate companies. These firms must derive at least half their revenues from the real estate sector. The real-estate mutual fund returned 16.76% over the last one year period.
The real estate mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.60% compared to a category average of 1.51%.
Cohen & Steers Realty Shares (CSRSX) invests a large proportion of its assets in equity securities of real estate companies. It invests in common and preferred stock, convertible securities and shares of real estate investment trusts. The real-estate mutual fund has a ten year annualized return of 12.03%.
As of March 2011, this real estate mutual fund held 58 issues, with 9.40% of its total assets invested in Simon Property Group, Inc.
Delaware Pooled Global Real Estate Securities (DGROX) seeks total return. The fund invests the majority of its assets in domestic and foreign real estate securities. Not more than 40% of its assets may be utilized to purchase foreign securities. The real-estate mutual fund returned 19.31% over the last one year period.
Damon Andres is the fund manager and he has managed this real estate mutual fund since 2007.
DWS RREEF Real Estate Securities A (RRRAX) invests the majority of its assets in real estate investment trusts and companies. It focuses on acquiring common stock, but may also purchase preferred or convertible stocks. The real-estate mutual fund has a three year annualized return of 2.13%.
The real estate mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.06% compared to a category average of 1.46%.
Huntington Real Strategies A (HRSAX) seeks capital growth and income. Publicly traded partnerships and trusts from the real estate sector, related equity securities and inflation protected instruments constitute the fund’s major investments. The real estate mutual fund returned 27.73% over the last one year period.
Peter A. Sorrentino is the fund manager and he has managed this real estate mutual fund since 2007.
To view the Zacks Rank and past performance of all real estate mutual funds, then click here.