3 Ways to Invest in the Real Estate Rally

Neuberger Berman Real Estate (NBRFX). This fund is also fairly concentrated. Comanager Brian Jones says the fund generally holds about 30 to 40 REIT stocks. "We do think that having fewer names and having a less index-like portfolio is an advantage," Jones says. He says the fund is able to generate more alpha—or risk-adjusted returns—from their high-conviction picks. The team believes that the economy will continue to grow—albeit at a slow rate—and that job creation will also be modest at best. As a result, management has overweighted certain speciality sectors that are experiencing demand, like data center buildings where companies store servers. The managers are avoiding areas like office and apartment properties that are highly dependent on job growth. Jones says there has also been a pick-up in global trade, so commercial warehouse properties look attractive. "We think there are areas that will recover faster than other areas of the economy," he says. The fund has returned about 5 percent, on average, over the past five years. The fund comes with annual expenses of 0.99 percent.

[See Is Your Portfolio Ready for a Double-Dip Recession?]

Fidelity Real Estate Income (FRIFX). This fund's manager, Mark Snyderman, will invest in a combination of real estate stocks, bonds, and corporate mortgage-backed securities (CMBS). "We try to create a mix that creates higher yields and dividends for the investors of the fund than just real estate stocks can do," he says. Currently, the fund is heavy on real-estate oriented bonds and CMBS and light on stocks. Snyderman says he added to the fund's holdings in CMBS over the past year because those securities are offering a higher yield than bonds. Because the fund invests in a mix of stocks, bonds, and CMBS, it will generally hold up better during downturns than its peers. But it also tends to lag a bit when real estate stocks rally. "If you lose a whole lot less money than your competitors in the bad times, your long-term performance ends up being a lot better," he says. Over the past five years, the fund has returned an annualized 3 percent. The fund's annual fees are 1 percent.

Reader Comments Read all comments (6)

Add Your Thoughts

Comment Name State Select One AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY International Email

Please enter the two words below into the text field underneath the image.

Incorrect please try again

Enter the words above: Enter the numbers you hear:

Your comment will be posted immediately, unless it is spam or contains profanity. For more information, please see our Comments FAQ.