For investors looking to park their funds in the real estate sector, mutual funds are the cheapest and most convenient. This category of funds also offers solid protection against inflation. The real estate sector has recently seen tough times but the presence of this investment vehicle generally adds stability to a portfolio. This is because volatility in property prices is far less compared to the extent experienced by stocks. Adding such funds to a widely diversified portfolio would increase returns while significantly reducing the associated risk.
Below we share with you four best-ranked 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.
Fidelity® Real Estate Income Fund M (MUTF:FRIQX) seeks above-average income along with growth of capital. FRIQX invests a bulk of its assets in securities issued by companies engaged in the real estate industry and other real estate-related investments. The fund invests in both U.S. as well as non-U.S. companies. Fidelity Advisor Real Estate Income Fund M has returned 8.1% over the last one-year time frame.
FRIQX has an expense ratio of 1.06% compared with the category average of 1.24%.
CGM Realty (MUTF:CGMRX) invests the lion's share of its assets in securities of companies within the real estate domain, irrespective of their market capitalization. CGMRX may invest not more than one-fifth of its assets in securities of companies from sectors other than real estate. The fund may also invest in debt securities throughout a wide range of credit qualities and maturities. The fund invests in securities of companies located globally and seeks appreciation of capital for the long run. CGM Realty has returned 15.9% over the last one-year time frame.
As of March 2017, CGMRX held 24 issues with 10.04% of its assets invested in Vale SA ADR.
Fidelity® Series Real Estate Income Fund (MUTF:FSREX) seeks appreciation of income and capital. FSREX invests the majority of its assets in preferred and common stocks of companies involved in the real estate sector. FSREX invests heavily in real estate investment trusts (REITs) as well as in mortgage-backed securities and debt securities of real estate entities. The fund invests both in U.S. and non-U.S. companies. Fidelity Series Real Estate Income Fund has returned 7.7% over the past one year.
Mark Snyderman is the fund manager of FSREX since 2011.
Neuberger Berman Real Estate Fund A (MUTF:NREAX) heavily invests in equity securities of REITs as well as in common stocks and other securities issued by other real estate companies. NREAX may also invest almost one-fifth of its assets in debt securities issued by real estate companies. The fund seeks growth of income and capital. Neuberger Berman Real Estate Fund A has returned 4.3% over the past one year.
NREAX has an expense ratio of 1.21% compared with the category average of 1.24%.