Real estate funds top other investments

Despite bleak market conditions, mutual funds and exchange-traded funds in the real estate sector have rebounded during the past year, the Wall Street Journal reported. Real estate has been the top-performing U.S.-stock fund category this year, through August, with a 13.7 percent total return, according to Morningstar, compared with a negative 4.6 percent for the Standard & Poor’s 500-stock index over the same period. Real estate funds typically invest in commercial real estate and multi-family — not single-family — housing. They also tend to concentrate on real estate investment trusts, or REITs. Whether or not real estate funds will continue to remain strong depends on the economy, though government officials have expressed concern that the recovery is stalling. “Real estate is a leveraged play on the U.S. economy,” said Timothy Strauts, a Morningstar analyst. “If we go back into a recession, real estate will fare worse” than the broad stock market, he said, but if the economy “continues to slowly grow, real estate will continue to lead.” [WSJ]

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