10 Best Real Estate Mutual Funds Of June 2024

The passively managed Vanguard Real Estate Index Fund owns about 160 real estate investment trusts (REITs), representing most public real estate sectors. With approximately $60 billion in total net assets, VGSLX is the largest fund on our list of best real estate mutual funds and the only one that is passively managed. Its current dividend yield tops all funds on our list.

Retail, Industrial and Telecom REITs make up nearly 40% of the fund. Retail REITs include the popular stores found in malls, while industrial REITs include warehouses and distribution centers, popular with big retailers like Amazon.com (AMZN) and Walmart (WMT). Telecom REITs include cell phone towers and properties used by cell phone companies.

VGSLX’s performance slightly surpasses its Morningstar category average, especially long-term. The fund’s share-price downtrend since the start of 2023 reflects the impact of rising interest rates, which generally hurt real estate values.

Formerly known by the TIAA-CEF brand name, the Nuveen Real Estate Securities Fund sports a laudable long-term track record. TCREX has outperformed its Morningstar category over the past five, 10 and 15 years. But it has a lower dividend yield.

TCREX managers seek real estate companies with sound cash flow and asset values. The fund is populated with U.S. REITs, mainly in the mid-cap space. With lower volatility than its peer group, TCREX’s price tends to trade within a narrower range than more volatile rivals.

With only about 40 holdings, the fund is concentrated. Its top-10 REITs make up roughly half of the fund’s assets. Nearly 90% of the fund is dedicated to the specialized, residential, industrial and retail REIT categories. Individual investors can purchase this fund. Another share class is offered by many company sponsored retirement accounts.

Over the past one, three and five years, Cohen and Steers Real Estate Securities Fund’s average annual return has topped its Morningstar category’s average performance.

CSZIX’s largest bets are on the infrastructure and industrial sectors. Congress in 2021 passed the Bipartisan Infrastructure Deal, which is pouring billions of dollars into those sectors.

The fund’s next largest bets are on the apartment, data center and health care sectors. Those bets align with the U.S.’s need for more housing as well as health care for our rapidly aging population. CSZIX’s allocation to data center properties jibes with a familiar, burgeoning industrial segment. Those trends provide CSZIX with a generous tailwind.

The three managers of DWS RREEF Real Estate Securities Fund cumulatively have more than 36 years of experience running this portfolio.

The managers seek real estate stocks that can outperform through long market cycles because the stocks blend five different traits that tend to excel in different phases of any cycle. Those traits are sustainability of earnings growth, momentum, size, value and low volatility. The managers take that active management seriously, evidenced by their 84% annual portfolio turnover rate.

Launched in December 1999, RRREX’s 10-year annual average performance ranks in about the top 25% percent of roughly 150 funds in its Morningstar category. RRREX’s favorite sectors are residential, cell towers and industrial. Prologis, American Tower and Equinix account for more than a quarter of the fund.

Prologis is a force in logistics, which mainly involves warehouses. American Tower owns wireless communications infrastructure. Equinix specializes in data centers. All are positioned to benefit from growing sector trends. You can invest in RRREX through DWS or a financial advisor.

VY CBRE Real Estate Fund considers real estate and economic trends when choosing real property sectors to target. Factors such as gross domestic product (GDP) growth, interest rates and occupancy rates help IVRSX managers pick the size of their geographic and property sector bets.

IVRSX’s average annual return topped its category average over the past one, three, five and 10 years.

IVRSX managers had the most faith in the residential, healthcare and industrial sectors as of their latest disclosure. Rising interest rates steer many home buyers, especially younger adults, toward rental opportunities. Healthcare stands to benefit from an aging global population. And industrial properties are a play on growing demand for warehouses and distribution centers.

This Voya fund is subadvised by CBRE Investment Management.

Cohen & Steers Realty Shares Fund has the best 10-year average annual return of any fund on our list. At $10,000, it also has the largest minimum initial investment requirement of any fund on our list. CSRSX aims for price appreciation plus income. The fund invests in common stocks, preferred stocks and other securities including REITs.

Investors looking for a fund that performs well amid market ups and downs should appreciate CSRSX. Its one, three, five-, 10- and 15-year average annual returns topped the Morningstar real estate category’s averages. In the past decade, CSRX outperformed its category average every year but 2016.

CSRSX makes widespread bets, with the industrial, infrastructure, apartment, data centers and health care sectors each having double-digit allocations of shareholder money. The fund can be purchased through intermediaries like financial advisors.

Baron Real Estate Income Fund pays the lowest dividend yield of any fund on our list. But BRIFX, which opened just before the dawn of 2018, has an average annual return over the past five years that is nearly quadruple its Morningstar investment category average.

Active management is a key to the fund’s performance. BRIFX has a turnover rate of about 110%. That turnover pace might explain why BRIFX’s management fee is the highest on our list but nevertheless ever-so-slightly lower than BRIFX’s category average.

Industrial and data centers REITs are BRIFX’s largest sector allocations. The fund is available to the public through the Baron Funds website.

Manning & Napier Real Estate Fund has been open since early 2019. The fund’s average annual return over the past three and five years has beaten its Morningstar category. And its annual management fee is low, less than one-tenth the size of its category average. But the fund advisor does charge shareholders with other management fees.

Currently, MNRWX has a double-digit portfolio weight in each of just two securities. One is Equinix, which provides network communications services and is a firm that makes the internet function. The other is Prologis, the warehouse and logistics firm.

What’s ahead? The fund sports a coveted Morningstar gold star rating. That means Morningstar analysts expect MNRWX to outdo rivals over a full market cycle of at least five years. Eligible investors include investment accounts managed by an advisor.

With $6.2 billion in total net assets, the Principal Real Estate Securities Fund is the third largest in our list. Shareholders aren’t the only investors to vote in favor of PRFSX with their pocketbooks. Each of PFRSX’s three managers has at least $1 million of their own money invested in the fund. Cumulatively, that’s the biggest cache of manager money at work in a fund on our list.

PFRSX seeks companies with above average earnings growth, trading at average or discounted valuations. The fund’s relatively low turnover rate reflects a more buy-and-hold strategy than most others in the list.

Another plus, during the past three and five years PFRSX—which opened in late 2016—has notched average annual returns that were higher than its Morningstar category’s average. Available in eligible retirement accounts, PFRSX has shown less volatility than its category over the past five years.

Dating back to 1986, Fidelity Real Estate Investment Portfolio is the oldest fund on our list. FRESX seeks a combination of capital growth and income. The fund’s average annual return over the past three, 10 and 15 years is higher than its Morningstar category’s average. And FRESX’s dividend yield is—like all of the other funds in our list—higher than what you can get from the broad stock market in the form of a typical S&P 500 Index fund.

Industrial, data centers, apartments and infrastructure are FRESX’s four largest sectors. Each has a double-digit percentage weighting in the portfolio. Investors generally have been optimistic about the first three of those sectors, Fidelity notes.

Also, the fund reports, “As labor costs begin to subside, [fund manager] Steve Buller is seeing opportunities in assisted-living and hotel real estate stocks that aren’t yet reflecting this impact in their valuations.” The fund is available through the Fidelity website and some other financial firms’ sites.