Sector – Real Estate fund seekers should consider taking a look at T. Rowe Price Real Estate (TRREX). TRREX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various 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.
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 $488 million, according to the most recently available information. The fund’s current manager, Gregg Korondi, has been in charge of the fund since January of 2024.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 4.16%, and it sits in the bottom third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3 -year annualized total return of 3.06%, which places it in the top third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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. The standard deviation of TRREX over the past three years is 21.48% compared to the category average of 16.82%. Over the past 5 years, the standard deviation of the fund is 21.65% compared to the category average of 17.09%. This makes the fund more volatile than its peers over the past half-decade.
The fund has a 5-year beta of 1.03, so investors should note that it is hypothetically as volatile as 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 negative alpha over the past five years of -9.97, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, TRREX is a no load fund. It has an expense ratio of 0.89% compared to the category average of 0.98%. From a cost perspective, TRREX is actually cheaper than its peers.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Overall, even with its comparatively weak performance, average downside risk, and lower fees, T. Rowe Price Real Estate ( TRREX ) has a high Zacks Mutual Fund rank, and therefore looks a great potential choice for investors right now.
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