Investing directly in the real estate sector may appear to be an exorbitant proposition for most investors. This is where mutual funds come in, offering a cost effective way to invest 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 funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all real estate funds, then click here.
Virtus Real Estate Securities A (PHRAX) 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. It seeks both income and capital growth. The real-estate fund returned 56.97% in the last one year period.
Geoffrey Dybas is the fund manager and he has managed this real estate fund since 1998.
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 equity or debt securities issued by firms not belonging to the real estate sector. The fund has a five year annualized return of 10.41%.
The real estate fund has a minimum initial investment of $2,500 and an expense ratio of 0.93% compared to a category average of 1.52%.
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 fund returned 57.6% in the last one year period and has a ten year annualized return of 11.45%.
As of March 2010, this real-estate fund held 53 issues, with 11.69% 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 fund returned 61.89% over the last one year period.
T. Ritson Ferguson is the fund manager and he has managed this real estate fund since 1998.
JPMorgan US Real Estate A (SUSIX) invests the majority of its assets in domestic real estate companies whose securities are traded publicly. At least 25% of its assets are invested in companies with interests in the real estate sector. The fund has a ten year annualized return of 10.07%.
The real estate fund has a minimum initial investment of $1,000 and an expense ratio of 1.18% compared to a category average of 1.52%.