Even though real estate looks hassled, securities from this sector should remain an integral part of portfolios with a long-term horizon. Over the years, mutual funds from this category have continued to perform well. They offer a convenient method of investing in real estate because of low initial investment requirements and the advantage of professional management. Investors willing to hold long-term positions would do well to consider these funds as they add stability and bring steady returns to a portfolio.
Below we will share with you four best-rated real estate mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future.
The Nuveen Real Estate Securities A (MUTF:FREAX) seeks growth of income and capital for the long run. FREAX invests the lion's share of its assets in income generating securities of companies involved in the real estate industry. The fund aims to invest mainly in equity REITs, but may also invest in all the three types of REITs. Nuveen Real Estate Securities A has a three-year annualized return of 15.5%.
Jay Rosenberg is one of the portfolio managers of FREAX since May 2005.
The VY Clarion Real Estate S (MUTF:IVRSX) invests a large chunk of its assets in common stocks of companies whose operations are related to the real estate domain and REITs. IVRSX seeks returns through high income and long-term capital appreciation. VY Clarion Real Estate S has a three-year annualized return of 15.5%.
IVRSX has an expense ratio of 0.96% as compared to the category average of 1.31%.
The Fidelity Real Estate Investment Portfolio (MUTF:FRESX) seeks long-term appreciation of capital and income. FRESX invests a bulk of its assets in securities of companies, which are involved in the real estate sector. The fund invests both in U.S. and non-U.S. companies. Fidelity Real Estate Investment Portfolio has a three-year annualized return of 16.9%.
As of July 2016, FRESX held 52 issues with 7.3% of its assets invested in Simon Property Group Inc. (NYSE:SPG)
The PIMCO Real Estate Real Return Strategy A (MUTF:PETAX) invests in real estate-linked derivatives and a basket of inflation-indexed securities to achieve its investment objective. PETAX seeks to provide maximum real return. The fund also invests in Fixed Income Instruments including bonds and debt instruments issued by domestic or foreign public and private sector entities. PIMCO Real Estate Real Return Strategy A has a three-year annualized return of 17.8%.
PETAX has an expense ratio of 1.14% as compared to the category average of 1.31%.