3 Real Estate Mutual Funds to Consider Amid Rise in New Home Sales

According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, the housing market in the United States was on the rise in December 2024. New home sales increased 3.6% every month to an annual rate of 698,000 units, 6.7% higher than in December 2023. The Commerce Department also revised the November rate to 674,000 units. This has made builders construct smaller houses to address the issue of affordability with high interest rates, which have been ranging around 7%.New Home Inventory Levels at an All-Time HighNew home inventory increased to 494,000 units in December, the highest since 2007, which could slow future housing starts as builders become more cautious. However, having this surplus of supply means that the demand for real estate is still robust because the residential investment segment is recovering.The Role of Real Estate Mutual FundsBecause of this, real estate mutual funds are in a good position to take advantage of the constant housing demand and more supplies. These funds mainly invest in REITs and other related assets and provide diversification and growth opportunities as the housing market shifts in response to the economy.We have chosen three real estate mutual funds — Fidelity Series Real Estate Income FSREX, Westwood Real Estate Income KIFAX and Fidelity Real Estate Income FRIFX — that investors should buy now for the long term. These funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), positive three-year and five-year annualized returns, minimum initial investments within $5000 and expense ratios considerably lower than the category average. So, these funds have provided a comparatively stronger performance and carry a lower fee.Fidelity Series Real Estate Income fund invests primarily in preferred and common stocks of real estate investment trusts, debt securities of real estate entities and commercial and other mortgage-backed securities, with a focus on lower-quality debt securities.Bill Maclay has been the lead manager of FSREX since March 31, 2019. Most of the fund's holdings were in companies like AGNC Investment Corp. (2%), Annaly Capital Management, Inc. (1.7%) and DigitalBridge Group, Inc. (1.7%) as of July 31, 2024.FSREX's 3-year and 5-year annualized returns are 1.6% and 4.1%, respectively. Its net expense ratio is 0.01%. FSREX has a Zacks Mutual Fund Rank #1.To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.Westwood Real Estate Income fund invests primarily in income-producing securities of companies in the real estate sector. KIFAX invests in securities of companies in real estate investment trusts, master limited partnerships and other real estate firms.John D. Palmer has been the lead manager of KIFAX since May 1, 2021. Most of the fund’s holdings were in Pebblebrook Hotel Trust (7.8%), EPR Properties (4%) and Saul Centers, Inc. (3.9%) as of July 31, 2024.KIFAX’s 3-year and 5-year returns are 1.5% and 3.1%, respectively. KIFAX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 1.27%.Fidelity Real Estate Income fund invests primarily in preferred and common stocks of real estate investment trusts, debt securities of real estate entities and commercial and other mortgage-backed securities, with a focus on lower-quality debt securities.Bill Maclay has been the lead manager of FRIFX since May 1, 2019. Most of the fund’s holdings were in American Tower Corp (2.5%), AGNC Investment Corp. (2%) and Equity LifeStyle Properties, Inc. (1.9%) as of July 31, 2024.FRIFX’s 3-year and 5-year returns are 0.3% and 3.5%, respectively. FRIFX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.68%.Want key mutual fund info delivered straight to your inbox?Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (FRIFX): Fund Analysis Report Get Your Free (FSREX): Fund Analysis Report Get Your Free (KIFAX): Fund Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks