For investors looking to park their money in the real estate sector, mutual funds are the cheapest and most convenient options. 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 three top-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. Investors can click here to see the complete list of funds.
Davis Real Estate Fund Class A RPFRX aims for total return through a combination of income and growth. The fund’s adviser applies the Davis Investment Discipline to invest the majority of the fund’s assets in securities issued by companies operating in the real estate industry. The fund mostly invests in common stocks of U.S.-based companies and even in non-U.S. companies. RPFRX has three-year annualized returns of 7.5%.
Andrew Adams Davis is one of the fund managers of RPFRX since 1994.
Fidelity Real Estate Income Fund FRIFX seeks higher-than-average income as well as appreciation of capital. The fund invests the lion’s share of its assets in real estate companies as well as other real estate related investments. The fund also invests in preferred and common stocks of real estate investment trusts, debt securities of real estate entities as well as commercial and other mortgage-backed securities. FRIFX has three-year annualized returns of 6.9%.
FRIFX carries an expense ratio of 0.75% compared with the category average of 1.20%.
PGIM Global Real Estate Fund- Class A PURAX seeks income and capital growth. The fund invests heavily in equity securities of real estate companies as well as real estate investment trusts (REITs) and other real estate securities. PURAX has three-year annualized returns of 5.8%.
As of August 2019, PURAX held 95 issues, with 4.13% of its assets invested in AvalonBay Communities Inc.
To view the Zacks Rank and past performance of all real estate funds, investors can click here to see the complete list of funds.
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