Sector – Real Estate fund seekers should consider taking a look at T. Rowe Price Real Estate (TRREX). TRREX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes TRREX in Sector – Real Estate, which is a segment packed with options. Real estate investment trusts (REITs) are a popular income vehicle thanks their taxation rules, and Sector – Real Estate mutual funds typically invest in them. A REIT is required to pay out at least 90% of its income annually to avoid double taxation, and this technique makes securities in these funds high dividend players–almost bond-like in some cases–though their risk is similar to equities.
History of Fund/Manager
T. Rowe Price is responsible for TRREX, and the company is based out of Baltimore, MD. T. Rowe Price Real Estate debuted in February of 1998. Since then, TRREX has accumulated assets of about $3.08 billion, according to the most recently available information. Nina P. Jones is the fund’s current manager and has held that role since January of 2019.
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 7.66%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 3.93%, which places it in the bottom third during this time-frame.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. TRREX’s standard deviation over the past three years is 13.39% compared to the category average of 9.89%. The fund’s standard deviation over the past 5 years is 14.04% compared to the category average of 10.39%. This makes the fund more volatile than its peers over the past half-decade.
It’s always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. TRREX lost 66.91% in the most recent bear market and underperformed its peer group by 3.01%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 0.74, so it is likely going to be less volatile than the market at large. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. TRREX has generated a positive alpha over the past five years of 0.02, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, TRREX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1.22%. TRREX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Overall, T. Rowe Price Real Estate ( TRREX ) has a high Zacks Mutual Fund rank, similar performance, average downside risk, and lower fees compared to its peers.
Don’t stop here for your research on Sector – Real Estate funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare TRREX to its peers as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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