Top 5 Real Estate Mutual Funds (Oct. 2011)

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.

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 18.78% 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 three year annualized return of 6.61%.

As of July 2011, this real-estate mutual fund held 43 issues, with 8.43% of its total assets invested in Simon Property Group, Inc.

Fidelity Real Estate Investment (FRESX) seeks capital appreciation and current income. The majority of the fund’s assets are invested in real estate companies or other investments related to the sector. The real-estate mutual fund returned 18.83% in the last one year period

The real estate mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.85% compared to a category average of 1.45%.

Nuveen Real Estate Securities A (FREAX) invests in publicly traded companies from the real estate sector. The fund focuses on acquiring income-generating common stock of real estate companies. Not more than 25% of its assets may be used to purchase foreign stocks. The real estate mutual fund has a ten year annualized return of 11.92%.

John G. Wenker is the Fund Manager and he has been managing this real estate mutual fund since 1999.

Goldman Sachs US Real Estate A (GREAX) seeks capital appreciation and dividend income. The fund utilizes a large proportion 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 17.74% over the last one year period.

The real estate mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.44% compared to a category average of 1.45%.

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

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.

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