Mutual Fund Education
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In case you are wondering whether mutual funds are right for you at all, you should read why mutual funds, in general, should be a part of your portfolio.
Check out our guide to real estate funds here.
Many advisors acknowledge that real estate belongs in many portfolios thanks to its above average yields, low correlation to other asset classes and overall risk-reducing benefits. REITs can also be used as a way to play certain economic trends. For example, the aging of America has put healthcare companies and the services they provide in high demand. Investors looking to capitalize on that trend may want to check out healthcare REITs, which typically invest in senior living communities, medical office buildings, hospitals and nursing facilities.
|Name||Ticker||Expense Ratio||AUM *||YTD Return *||3 Year Avg Return *|
|TIAA-CREF Real Estate Securities Fund||TCREX||0.82%||$2.1B||9.20%||9.93%|
|Fidelity Real Estate Investment Fund||FRESX||0.76%||$4.2B||4.06%||9.75%|
|Vanguard REIT Index Fund||VGSIX||0.26%||$63.7B||4.24%||8.87%|
|Cohen & Steers Realty Shares Fund||CSRSX||0.96%||$4.6B||5.26%||9.48%|
|DFA Real Estate Securities Fund||DFREX||0.19%||$8.3B||4.49%||9.41%|
Each of these funds has billions of dollars in assets, so liquidity and tradability are high. Vanguard, not surprisingly, is one of the low cost leaders, although the DFA Real Estate Securities Fund is even cheaper. All have produced returns in the 9-10% range, putting them nearly on par with the S&P 500. Real estate funds have been riskier than the S&P 500 over the past several years, but their low correlation with other equity sectors has made them better fits in a broader portfolio.
On the other hand, real estate can be negatively impacted by rising interest rates. If there is a prolonged lack of demand in rental properties or the ability to charge and raise rents, REIT funds will likely underperform.
Be sure to check our News section to keep track of recent fund performances.
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Mutual Fund Education