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MNREX or TRRSX: Which Real Estate Mutual Fund to Buy?

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Investing in the real estate sector adds stability to one’s portfolio, mainly because volatility in property prices is far less than what is experienced by stocks. So, investors willing to hold long-term positions would do well to consider real estate mutual funds as these add stability and bring steady returns. This category of funds also offers superior protection against inflation and is a solid investment choice.

Meanwhile, the Real Estate Select Sector SPDR Fund (XLRE) has gained 23.4% over the past six months. So, investing in real estate mutual funds seems prudent as of now. Let us look at two of the best funds from the space and find out which one is a better investment.

Manning & Napier Real Estate Series Class S (MNREX - Free Report)

This fund aims for high current income and long-term capital growth by investing primarily in companies in the real estate industry. The fund invests at least 80% of assets in securities of companies that are principally engaged in the real estate industry. 

This Sector-Real Estate product has a history of positive total returns for over 10 years.  Specifically, the fund’s returns are 12.4% over a three-year period and 7.5% over a five-year period. To see how this fund performed compared with its category, and other #1 and 2 Ranked Mutual Funds, please click here.  

Manning & Napier Real Estate Series Class S fund, as of the last filing, allocates its assets in the top two major groups; Intermediate Bond and Large Value. Further, as of the last filing, Equinix, Inc. and Prologis, Inc. were the top holdings in MNREX.

This Zacks Mutual Fund Rank #1 (Strong Buy) fund was incepted in November 2009 and is managed by Manning & Napier. MNREX carries an expense ratio of 1.10% and requires a minimal initial investment of $2,000.

TIAA-CREF Real Estate Securities Fund Retirement Class (TRRSX - Free Report)

The fund seeks maximum total returns over the long run through growth of capital and current income. TRRSX invests a large chunk of its assets in companies primarily involved in operations related to the real estate domain. The fund may invest a maximum of 15% of its assets in securities issued by foreign entities.

This Sector-Real Estate product has a history of positive total returns for over 10 years.  Specifically, the fund’s returns are 16.1% over a three-year period and 10.3% over a five-year period. To see how this fund performed compared with its category, and other #1 and 2 Ranked Mutual Funds, please click here.

TIAA-CREF Real Estate Securities Fund Retirement Class, as of the last filing, allocates its assets in the top two major groups, Intermediate Bond and Large Value. Further, as of the last filing, Prologis, Inc. and American Tower Corp were the top holdings for TRRSX.

This Zacks Rank #1 (Strong Buy) fund was incepted in December 2002 and is managed by TIAA-CREF. TRRSX carries an expense ratio of 0.75% and requires a minimal initial investment of $0.

To Conclude

While both MNREX and TRRSX are buy-rated funds, upon taking a closer look, we find that the latter is a clear winner. Not only are the administrative and other operating expenses of MNREX higher than TRRSX’s, the latter has a history of providing higher and more consistent returns compared to MNREX.

It should also be noted that TRRSX offers lower risk compared to MNREX. TRRSX has a three-year beta of 0.74 compared with MNREX’s 0.78. Therefore, TRRSX is the fund that one must bet on given its mildly lower risk and consistently higher returns.

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