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Top 5 Real Estate Mutual Funds

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Real estate mutual funds have delivered significantly high returns in the past and bring stability and steady returns to portfolios over the long term.

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Mutual funds investing in the real estate sector should be a necessary addition to portfolios with a long-term horizon even though the sector has traversed rough waters in the recent past.

Real estate mutual funds have delivered significantly high returns in the past and offer a convenient method for investing in this sector. With their low initial investment requirements, well-diversified portfolios, and professional management, they can go a long way in lowering the risk involved. They also bring stability and steady returns to portfolios over the long term.

Below we will share with you five top-rated real estate mutual funds. Each has earned a Zacks No. 1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all real estate funds, click here.

1. Fidelity Real Estate Investment (FRESX) invests the majority of its assets in real estate companies or other investments related to the sector. The fund is nondiversified and invests in both domestic and foreign securities. The real estate mutual fund returned 8.29% over the last one-year period. Steve J. Buller is the fund manager and he has been managing this real estate mutual fund since 1997.

2. American Century Real Estate (REACX) seeks a high level of total return. The fund invests heavily in equity securities of real estate investment trusts and companies from the real estate industry. The real-estate mutual fund returned 11.6% over the last one-year period.
The real estate mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.16% compared to a category average of 1.39%.

3. Neuberger Berman Real Estate (NBRFX) primarily invests in equity securities issued by real estate investment trusts. It also invests in common stocks and other securities issued by companies from the real estate industry. The real estate mutual fund returned 8.3% over the last one-year period. As of November 2011, this real estate mutual fund held 42 issues, with 9.25% of its total assets invested in Simon Property Group, Inc.

4. Nuveen Real Estate Securities A (FREAX) seeks current income and long-term capital growth. The fund invests in publicly traded companies from the real estate sector. The fund focuses on acquiring income-generating common stock of real estate companies. Not more than 25% of its assets may be used to purchase foreign stocks. The real estate mutual fund returned 6.31% over the last one-year period.
John G. Wenker is the fund manager and he has been managing this real estate mutual fund since 1999.

5. DWS RREEF Real Estate Securities A (RRRAX) invests the majority of its assets in real estate investment trusts and companies. It focuses on acquiring common stock, but may also purchase preferred or convertible stocks. The real estate mutual fund returned 8.99% over the last one-year period. The real estate mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.06% compared to a category average of 1.39%.

Editor's Note: To read this article on Zacks.com click here.

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No positions in stocks mentioned.
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