Best Performing Real Estate Mutual Funds of 2012

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The best real estate mutual funds of 2012 are PIMCO Real Estate Real Return Strategy, CGM Realty, Fidelity Real Estate Income, etc. These mutual funds also provide higher regular dividend income.

Intro

Direct investment in the real estate sector may be difficult for most regular investors. There are several of requirements and skills to manage real estate such as loan, maintenance, law, tenant relationship, marketing, etc. Using mutual funds, investors can instantly get a cost effective method of investing in this industry. You can also check my previous Top Performer Real Estate Funds of June 2011 article.

Top Real Estate Funds 2012
Although a real estate market has not been great for the past 3 to 4 years, the long term performance has been great for investors. There are 3 main reasons why investors should consider REIT funds:
  • Real estate mutual funds can provide protection against inflationary pressures due to government policy, economic condition, and currency risk. 
  • Recent research has presented that they perform better compared to precious metals such as gold, silver, platinum, and rare coins. 
  • Using mutual funds, investors can diversify their assets portfolio by reducing investment risks and enhance its returns.
Note: REIT= Real Estate Investment Trust

Top Performers

The following list has been compiled by sorting through its performance for the past 5 years. Most of these REIT funds are also rated among the best in their class. Please check details about its performance, expense ratio, sales load, initial investment requirement, risk, top holdings, etc.

The 12 Best Performing Real Estate Mutual Funds of 2012 are:
  1. PIMCO Real Estate Real Return Strategy A (PETAX)
  2. CGM Realty (CGMRX)
  3. REMS Real Estate Value Opportunity Institutional (HLRRX)
  4. Fidelity Real Estate Income (FRIFX)
  5. Forward Select Income A (KIFAX)
  6. Neuberger Berman Real Estate Trust (NBRFX)
  7. Stratton Real Estate (STMDX)
  8. Managers Real Estate Securities (MRESX)
  9. Nuveen Real Estate Securities I (FARCX)
  10. REMS Real Estate Income 50/50 Institutional (RREIX)
  11. ING Real Estate Institutional (CRARX)
  12. Eaton Vance Real Estate I (EIREX)
updated on 2/4/2012

PIMCO fund profile
1. PIMCO Real Estate Real Return Strategy A (PETAX)

PIMCO Real Estate Real Return Strategy A uses a large proportion of its assets to buy real estate linked derivative instruments backed by a portfolio of inflation-indexed securities and other Fixed Income or debt. The fund may also invest in stocks with foreign currencies. This real-estate mutual fund has a five year annualized return of 4.64%. The fund’s manager is Mihir Worah since 2007.

The real estate mutual fund has an expense ratio of 1.19% compared to a category average of 1.39%. Investor can invest with $1,000 initial funding. This fund is rated with 3 stars rating by Morningstar.

2. CGM Realty (Symbol: CGMRX)

CGM Realty fund objective is to provide a combination of long term capital growth and income. This CGMRX fund invests the majority of its assets in real estate investment trusts (REITs) and related investments. It may invest in US and foreign securities. This fund has a dividend yield of 0.99%. It doesn’t have a sales load. The fund’s total net assets are $1.6 Billion.

This stock fund is managed by G. Kenneth Heebner since May 1994. Heebner is the general partner and portfolio manager with Capital Growth Management. This REIT fund is non-diversified and has a three year annualized return of 20.69%. Morningstar has rated this fund with 4 stars rating.

3. REMS Real Estate Value Opportunity Institutional (HLRRX)

REMS Real Estate Value Opportunity Institutional fund invests >80% of its assets in companies which engaged in the real estate industry and other real estate related investment. This fund may held >20 holdings in its portfolio. The real-estate mutual fund has a five year annualized return of 4.11%. This HLRRX fund has a dividend yield of 2.79%.

As of January 2012, the top 3 stocks in its holdings are Colony Financial Inc (4.89%), Northstar Realty Finance Corporation (4.72%), and Apartment Investment & Management (4.62%). Edward W. Turville is the fund manager. The 3 year beta of this top performing fund is 1.48.

4. Fidelity Real Estate Income (FRIFX)

Fidelity Real Estate Income fund
Fidelity Real Estate Income fund seeks higher than average income and capital growth. This fund utilizes most of its assets to purchase equity securities of companies from the real estate sector such as preferred, common stocks of REITs, REIT debt securities, and commercial & other mortgage backed securities. This real-estate mutual fund has a three year annualized return of 22.24%. For 2011, its total return is 4.71%.

As the best REIT fund, this FRIFX fund has a minimum initial investment of $2,500 and an expense ratio of 0.92% compared to a category average of 1.39%. The total net assets are $1.90 billion. The top 4 sectors in its holding are Real Estate (88.12%), Healthcare (4.88%), Consumer Cyclical (4%), and Financial Services (2.99%).

5. Forward Select Income A

Forward Select Income fund invests in income-producing securities of real estate companies such as real estate investment trusts or REITs, master limited partnerships, and other real estate firms. The fund’s lead manager is Joel Beam since 2001. The expense ratio is 1.44%.

Top 10 International Large Cap Stock Mutual Funds 2012

Investor can buy this top performer equity fund from 74 brokerages like E Trade, TD Ameritrade, Scottrade, etc. The minimum initial investment is $4,000 for brokerage and IRA account.

6. Neuberger Berman Real Estate Trust

The investment objective of this Neuberger Berman Real Estate Trust fund is to seek total return by investing in real estate securities, emphasizing both capital appreciation and current income. The 12 month yield of this NBRFX fund is 1.97%. Steve S. Shigekawa is the fund manager.

The fund has returned 8.30% over the past year, 22.08% over the past 3 year, and 1.14% over the past 5 year. As of December 2011, the fund’s top holding is Simon Property Group Inc (9.25%).

7. Stratton Real Estate

Stratton Mutual Funds
This Stratton Real Estate fund primarily invests in Real Estate companies’ stocks. The total net assets are $82 million. The portfolio turnover rate is 7.2%. There is no sales load and its yield is 2.06%. Morningstar has rated this fund with 4 stars rating.

8. Managers Real Estate Securities

As part of best performing real estate mutual fund, the Managers Real Estate Securities fund aim is to achieve a combination of income and long-term capital appreciation. This real estate fund is opened to any new investors. Initially, you will need $2,000 to invest in this fund.

9. Nuveen Real Estate Securities I

Nuveen Investments
Nuveen Real Estate Securities I is rated with 5 stars rating by Morningstar. It also has total net assets of $3.4 Billion. The expense ratio fee is 1.02% per year. It is closed to new investors. The 3 year beta of this top fund is 1.36.

10. REMS Real Estate Income 50/50 Instl

The REMS Real Estate Income 50/50 Institutional utilizes large amount of its assets to purchase equity securities issued by real estate investment trusts and companies. It is managed by Edward W. Turville. The fund’s yield is 3.96%. It has only $56 million total net assets.

11. ING Real Estate Institutional

The ING Real Estate Institutional fund seeks to provide total return by capital appreciation and current income. The fund’s managers are T. Ritson Ferguson and Joseph P. Smith. This institutional class fund is rated with 4 stars rating. For 2011, it returned 9.76% based on load adjusted returns.

12. Eaton Vance Real Estate I

Eaton Vance
Eaton Vance Real Estate fund invests in equity securities of real estate sector companies or those with linkages to the industry. There is no sales load and the expense ratio fee is 1.15%. As of December 2011, the top 5 stocks in this fund are Simon Property Group Inc, AvalonBay Communities Inc, Boston Properties Inc, Equity Residential, and Public Storage.

Disclosure: No Position

Other Top Performers Article:
No Name Ticker 5 Year Return %
1 PIMCO Real Estate Real Return Strategy A PETAX 4.64
2 CGM Realty CGMRX 4.50
3 REMS Real Estate Value Opportunity Instl HLRRX 4.11
4 Fidelity Real Estate Income FRIFX 3.77
5 Forward Select Income A KIFAX 1.30
6 Neuberger Berman Real Estate Tr NBRFX 0.75
7 Stratton Real Estate STMDX 0.64
8 Managers Real Estate Securities MRESX 0.15
9 Nuveen Real Estate Secs I FARCX -0.01
10 REMS Real Estate Income 50/50 Instl RREIX -0.22
11 ING Real Estate Instl CRARX -0.58
12 Eaton Vance Real Estate I EIREX -0.76
13 GMO Real Estate III GMORX -0.87
14 Phocas Real Estate PHREX -0.90
15 E.I.I. Realty Securities Instl EIIRX -1.02
16 ING Clarion Real Estate Port S IVRSX -1.22
17 Cohen & Steers Realty Income A CSEIX -1.23
18 Vanguard REIT Index Inv VGSIX -1.35

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