Do you want to invest in real estate, but prefer the diversification of a stock mutual fund? Consider investing in a real estate mutual fund or a Real Estate Investment Trust (REIT).

A REIT is similar to a mutual fund, though instead of investing in securities it invests in short term construction loans and mortgages and in actual real estate.  Real estate mutual funds tend largely to invest in REITs.

If you are seeking more ways to diversify a growing portfolio, a real estate fund or a REIT may be able to give you the hedge or added exposure you need.

Consider the information in a December 26th  Wall Street Journal article, “even many of the worst real estate funds delivered twice as much as the average U.S. stock fund in the past year.” (Gullapalli) The same article notes that real-estate funds have been the best performing U.S. stock for several categories for performance periods, including one year and five years.

Given current market conditions and economic trends, these incredible returns are not likely to be repeated in the near future; but investors should take note of the opportunity for investing in this often overlooked avenue for real estate investing.

Disclosure