Mutual funds investing the real estate sector should be a necessary addition to portfolios with a long term horizon even though the sector has traversed rough waters in the recent past. Real estate mutual funds have delivered significantly high returns in the past and offer a convenient method for investing in this sector. With their low initial investment requirements, well diversified portfolios and professional management they can go a long way in lowering the risk involved. They also bring stability and steady returns to portfolios over the long term.
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.
RiverSource Real Estate A (ARLAX) seeks current income and capital growth. It invests the majority of its assets in securities issued by companies from the real estate sector. The real-estate mutual fund returned 25.62% over the last one year period.
Julene Melquist is the fund manager and he has managed this real estate mutual fund since 2005.
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 July 2010, this real estate mutual fund held 333 issues, with 7.70% of its total assets invested in Fidelity Revere Str Tr.
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 has a ten year annualized return of 19.01%.
The real estate mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.93% compared to a category average of 1.49%.
Cohen & Steers Realty Shares (CSRSX) invests the majority 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 returned 27.14% in the last one year period and has a five year annualized return of 3.54%.
Robert M. Steers is the fund manager and he has managed this real estate mutual fund since 1991.
Ivy Real Estate Securities A (IRSAX) seeks 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 returned 27.98% over the last one year period.
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%.
To view the Zacks Rank and past performance of all real estate mutual funds, then click here.