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Mortgage Rate Hits Ninth All-Time Low in 2020: 4 Fund Picks
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A turbulent week in the equity market also affected the lenders as rates trickled down to an all-time low yet again. Per the latest Freddie Mac report, the 30-year fixed-rate mortgage averaged 2.86% for the week ending Sep 10. The parameter has fallen by 13 basis points from the week before and marks the ninth all-time record low in 2020. Previously, the 30-year fixed mortgage rate hit a record low of 2.88% in the week ending Aug 29.
The decline in mortgage rates is due to a late summer slowdown in economic recovery. However, this has ignited robust demand and purchase activities in the real-estate sector. According to Freddie Mac’s Chief Economist, Sam Khater, low rates due to the slowdown have pushed “purchase demand activity, which is up 25% from a year ago and has been growing at double-digit rates for four consecutive months.”
In fact, applications for new mortgages for the week ending on Sep 4 surged 3% from the week before and the size of average loan continued to grow, reaching a $368,600, which is the highest amount since Mortgage Bankers Association (MBA) began tracking in 1990.
Additionally, the record low rate also has an impact on homeowners, who are planning to opt for refinance facility on their existing loans. Per the mortgage data company, Black Knight, there are 19.3 million high-quality refinance candidates at present.
The housing sector has so far emerged as one of the few areas of strength in the U.S. economy, as economies across the globe continue to battle with the life-threatening coronavirus pandemic.
Top 4 Real Estate Fund to Buy
The all-time low mortgage rate and strong housing data in the prior months supports the growth prospects in real-estate sector. Hence, we have shortlisted four mutual funds from this space carrying a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
DWS RREEF Real Estate Securities Fund - Class A (RRRAX - Free Report) aims for long-term capital appreciation and current income. RRRAX is non-diversified and invests the majority of its assets in equity securities of real estate investment trusts and real estate companies.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 3.9% and nearly 4% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
RRRAXhas an annual expense ratio of 0.98%, which is below the category average of 1.20%.
MFS Global Real Estate Fund Class R6 (MGLRX - Free Report) aims for total return. The fund invests the majority of its assets in equity securities of U.S. and foreign real estate-related investments. MGLRX may also invest the fund's assets in real estate-related investments of any size.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 5.5% and 6.4% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
MGLRX has an annual expense ratio of 0.90%, which is below the category average of 1.26%.
John Hancock Funds II Real Estate Securities Fund Class 1 (JIREX - Free Report) aims for both long-term capital appreciation and current income. The majority of this fund’s assets is invested equity securities of REITs and real estate companies. This non-diversified fund’s investment in equity securities includes common stocks, preferred stocks and securities convertible into common stocks.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 4.1% and 5.7% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JIREX has an annual expense ratio of 0.80%, which is below the category average of 1.20%.
Neuberger Berman Real Estate Fund Class R6 (NRREX - Free Report) aims for total return. Additionally, the fund gives importance to capital appreciation and current income. The majority of this non-diversified fund’s assets is invested in equity securities of real estate investment trusts and real estate companies.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 7.6% and 7.9% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NRREXhas an annual expense ratio of 0.76%, which is below the category average of 1.20%.
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Mortgage Rate Hits Ninth All-Time Low in 2020: 4 Fund Picks
A turbulent week in the equity market also affected the lenders as rates trickled down to an all-time low yet again. Per the latest Freddie Mac report, the 30-year fixed-rate mortgage averaged 2.86% for the week ending Sep 10. The parameter has fallen by 13 basis points from the week before and marks the ninth all-time record low in 2020. Previously, the 30-year fixed mortgage rate hit a record low of 2.88% in the week ending Aug 29.
The decline in mortgage rates is due to a late summer slowdown in economic recovery. However, this has ignited robust demand and purchase activities in the real-estate sector. According to Freddie Mac’s Chief Economist, Sam Khater, low rates due to the slowdown have pushed “purchase demand activity, which is up 25% from a year ago and has been growing at double-digit rates for four consecutive months.”
In fact, applications for new mortgages for the week ending on Sep 4 surged 3% from the week before and the size of average loan continued to grow, reaching a $368,600, which is the highest amount since Mortgage Bankers Association (MBA) began tracking in 1990.
Additionally, the record low rate also has an impact on homeowners, who are planning to opt for refinance facility on their existing loans. Per the mortgage data company, Black Knight, there are 19.3 million high-quality refinance candidates at present.
The housing sector has so far emerged as one of the few areas of strength in the U.S. economy, as economies across the globe continue to battle with the life-threatening coronavirus pandemic.
Top 4 Real Estate Fund to Buy
The all-time low mortgage rate and strong housing data in the prior months supports the growth prospects in real-estate sector. Hence, we have shortlisted four mutual funds from this space carrying a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
DWS RREEF Real Estate Securities Fund - Class A (RRRAX - Free Report) aims for long-term capital appreciation and current income. RRRAX is non-diversified and invests the majority of its assets in equity securities of real estate investment trusts and real estate companies.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 3.9% and nearly 4% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
RRRAXhas an annual expense ratio of 0.98%, which is below the category average of 1.20%.
MFS Global Real Estate Fund Class R6 (MGLRX - Free Report) aims for total return. The fund invests the majority of its assets in equity securities of U.S. and foreign real estate-related investments. MGLRX may also invest the fund's assets in real estate-related investments of any size.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 5.5% and 6.4% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
MGLRX has an annual expense ratio of 0.90%, which is below the category average of 1.26%.
John Hancock Funds II Real Estate Securities Fund Class 1 (JIREX - Free Report) aims for both long-term capital appreciation and current income. The majority of this fund’s assets is invested equity securities of REITs and real estate companies. This non-diversified fund’s investment in equity securities includes common stocks, preferred stocks and securities convertible into common stocks.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 4.1% and 5.7% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JIREX has an annual expense ratio of 0.80%, which is below the category average of 1.20%.
Neuberger Berman Real Estate Fund Class R6 (NRREX - Free Report) aims for total return. Additionally, the fund gives importance to capital appreciation and current income. The majority of this non-diversified fund’s assets is invested in equity securities of real estate investment trusts and real estate companies.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 7.6% and 7.9% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NRREXhas an annual expense ratio of 0.76%, which is below the category average of 1.20%.
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 >>