http://blog.mutualdecision.com/articles/2007/06/20/real-estate-funds-are-in-a-class-of-their-own en-us 40 Insight from the minds behind MUTUALdecision <div>Commercial real estate (office buildings, shopping centers, etc.) is considered to be a separate asset class from stocks and bonds.&nbsp;Thus, an investor can gain additional diversification by investing in commercial real estate.&nbsp;If you aren&rsquo;t able to buy a group of apartment buildings or shopping centers, and most of us aren&rsquo;t, the way to invest in real estate is through a REIT (Real Estate Investment Trust) which owns a number of properties or mortgages.&nbsp;Equity REITs own properties.&nbsp;Mortgage REITs are similar to long term bond funds.&nbsp;Of course, rather than trying to select one or two REITs, investing in a REIT/real estate fund is hiring a professional manager to do it for you and provides diversification.&nbsp;There are a number of excellent REIT/real estate mutual funds, see <a href="http://www.mutualdecision.com/mutual_fund/top_ten_funds/fund/42">MUTUALdecision&rsquo;s top ten Real Estate Funds list</a>. </div> <div>&nbsp;</div> <div>One attraction of REIT funds is their relatively high current yield.&nbsp;But beware, check the fund to see if its yield is enhanced through the use of debt or preferred stocks.&nbsp;These investments can boost the yield at the expense of long term growth.&nbsp;You need to consider the short-term/long-term trade-off and decide which fund investment profile is right for you.&nbsp;Also, be aware that REITs and REIT/real estate funds have had quite a run over the past few years.&nbsp;Some pundits believe they are fully valued or due for a correction.&nbsp;Lastly, note the &ldquo;conventional wisdom&rdquo; that real estate investments go down when interest rates go up.&nbsp;Indeed, REIT stocks/funds have been weak over the past couple of weeks as interest rates increased.&nbsp;I don&rsquo;t subscribe to the interest rate/real estate stock fund price relationship except on a short term basis.&nbsp;Long term, a good REIT/real estate fund will make investments which will increase in value.</div> <div>&nbsp;</div> <div>REIT/real estate funds should be part of any investor&rsquo;s portfolio and you also might consider an international real estate fund.</div> Wed, 20 Jun 2007 13:23:00 -0500 urn:uuid:a48a72fe-f7b7-48b0-9549-8c1cdb6c34fb Bill Byrnes http://blog.mutualdecision.com/articles/2007/06/20/real-estate-funds-are-in-a-class-of-their-own Investing Mutual fund blog Mutual Funds REIT REIT Mutual Funds Real Estate Mutual Funds