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Buy These 3 Funds on a Solid Jump in Construction Spending
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Construction activity is expanding as demand for homes is showing signs of a rebound amid declining mortgage rates. The Commerce Department reported on Feb 1 that spending on construction activity jumped a solid 0.9% in December, beating analysts’ expectations of a 0.5% rise.
This follows an upwardly revised 0.9% spending in November. Year over year, spending on construction projects soared 13.9% in December, while overall construction spending increased 7% in 2023.
Spending on private construction projects grew 0.7% in December. Investments in residential construction projects 1.4%, after increasing 1% in November. Outlays on new single-family construction projects jumped a solid 1.6%.
The homebuilding sector was the mainstay of construction spending before and just after the pandemic. However, demand for new homes slowed as mortgage rates soared following the Federal Reserve’s aggressive interest rate hike policy to tackle 40-year high inflation.
The Federal Reserve hiked interest rates by 525 basis points since March 2022 to take its benchmark policy rate to the current range of 5.25-5.50%, which saw mortgage rates hitting multi-decade highs.
However, the scene is changing. Demand was already high and buyers are once again flocking to markets as the Fed’s monetary campaign has resulted in a sharp decline in inflation. The popular 30-year fixed rate mortgage rate jumped to 7.79% in October to hit a 23-year high, but is now hovering below the 6.5% range as the Federal Reserve has halted interest rate hikes.
The Federal Reserve is now gearing up to start rate cuts, which is further going to aid the homebuilding market and boost spending on construction projects.
3 Best Choices
As a result, we’ve chosen three funds from the real estate sector that are worth buying. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Northern Multi-Manager Glbl Real Estate (NMMGX - Free Report) fund aims for long-term capital growth and current income. NMMGX invests the majority of its assets in equity securities of real estate companies and those related to the real estate industry. Northern Multi-Manager Global Real Estate Fund may invest in securities of companies around the world.
Northern Multi-Manager Glbl Real Estate fund has a 5-year and 10-year annualized return of 1.7% and 4.5%, respectively. The annual expense ratio of 0.92% is lower than the category average of 1.21%. NMMGX carries 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.
T. Rowe Price Global Real Estate Fund (TRGRX - Free Report) seeks appreciation of capital and current income over the long term. TRGRX primarily invests its assets (including any borrowings for investment purposes) in equity securities of real estate businesses around the world, including those in the United States. T. Rowe Price Global Real Estate Fund is a non-diversified fund.
T. Rowe Price Global Real Estate Fund has a 5-year and 10-year annualized return of 1.9% and 4.6%, respectively. The annual expense ratio of 0.74% is lower than the category average of 1.21%. TRGRX has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Manning & Napier Real Estate S (MNREX - Free Report) fund aims for high current income and long-term capital growth by investing primarily in companies in the real estate industry. MNREX invests at least 80% of its assets in securities of companies that are directly engaged in the real estate industry as well as in industries serving or related to the real estate industry.
Manning & Napier Real Estate S fund has a 5-year and 10-year annualized return of 5% and 7%, respectively. The annual expense ratio of 0.85% is lower than the category average of 1.08%. MNREX carries 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.
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Buy These 3 Funds on a Solid Jump in Construction Spending
Construction activity is expanding as demand for homes is showing signs of a rebound amid declining mortgage rates. The Commerce Department reported on Feb 1 that spending on construction activity jumped a solid 0.9% in December, beating analysts’ expectations of a 0.5% rise.
This follows an upwardly revised 0.9% spending in November. Year over year, spending on construction projects soared 13.9% in December, while overall construction spending increased 7% in 2023.
Spending on private construction projects grew 0.7% in December. Investments in residential construction projects 1.4%, after increasing 1% in November. Outlays on new single-family construction projects jumped a solid 1.6%.
The homebuilding sector was the mainstay of construction spending before and just after the pandemic. However, demand for new homes slowed as mortgage rates soared following the Federal Reserve’s aggressive interest rate hike policy to tackle 40-year high inflation.
The Federal Reserve hiked interest rates by 525 basis points since March 2022 to take its benchmark policy rate to the current range of 5.25-5.50%, which saw mortgage rates hitting multi-decade highs.
However, the scene is changing. Demand was already high and buyers are once again flocking to markets as the Fed’s monetary campaign has resulted in a sharp decline in inflation. The popular 30-year fixed rate mortgage rate jumped to 7.79% in October to hit a 23-year high, but is now hovering below the 6.5% range as the Federal Reserve has halted interest rate hikes.
The Federal Reserve is now gearing up to start rate cuts, which is further going to aid the homebuilding market and boost spending on construction projects.
3 Best Choices
As a result, we’ve chosen three funds from the real estate sector that are worth buying. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Northern Multi-Manager Glbl Real Estate (NMMGX - Free Report) fund aims for long-term capital growth and current income. NMMGX invests the majority of its assets in equity securities of real estate companies and those related to the real estate industry. Northern Multi-Manager Global Real Estate Fund may invest in securities of companies around the world.
Northern Multi-Manager Glbl Real Estate fund has a 5-year and 10-year annualized return of 1.7% and 4.5%, respectively. The annual expense ratio of 0.92% is lower than the category average of 1.21%. NMMGX carries 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.
T. Rowe Price Global Real Estate Fund (TRGRX - Free Report) seeks appreciation of capital and current income over the long term. TRGRX primarily invests its assets (including any borrowings for investment purposes) in equity securities of real estate businesses around the world, including those in the United States. T. Rowe Price Global Real Estate Fund is a non-diversified fund.
T. Rowe Price Global Real Estate Fund has a 5-year and 10-year annualized return of 1.9% and 4.6%, respectively. The annual expense ratio of 0.74% is lower than the category average of 1.21%. TRGRX has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Manning & Napier Real Estate S (MNREX - Free Report) fund aims for high current income and long-term capital growth by investing primarily in companies in the real estate industry. MNREX invests at least 80% of its assets in securities of companies that are directly engaged in the real estate industry as well as in industries serving or related to the real estate industry.
Manning & Napier Real Estate S fund has a 5-year and 10-year annualized return of 5% and 7%, respectively. The annual expense ratio of 0.85% is lower than the category average of 1.08%. MNREX carries 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.
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 >>