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3 Funds to Buy on Steady Expansion in Construction Activity
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Spending on construction projects is steadily increasing even as inflation remains high and price pressures pose major challenges. However, inflation has been cooling lately, which is aiding the expansion of construction activity.
Homebuilding has been the mainstay of construction activity, but a contraction in the housing market saw investment in construction activity fizzling out. However, spending on private residential projects has once again started increasing, which is boosting construction activity.
Thus, funds like T. Rowe Price Global Real Estate Fund (TRGRX - Free Report) , Fidelity Real Estate Income Fund (FRIFX - Free Report) and Fidelity Real Estate Investment Portfolio (FRESX - Free Report) are likely to benefit in the near term.
Construction Spending Increases
Spending on construction projects rose a solid 0.5% to a seasonally adjusted annual rate of $1,983.5 billion in August, which came in line with economists’ expectations, the Commerce Department said on Oct 2. This follows 0.9% growth in July. Year over year, construction spending soared 7.4% in August.
Spending was once again driven by investments in private residential projects. Spending on private residential projects increased 0.6% in August after rising 1.6% in July. Overall, private construction projects spending increased 0.5% in August.
Construction spending totaled $1,284.7 billion in the first eight months of this year compared to $1,233.4 billion during the same period in 2022. Spending on private non-residential structures, such as factories, saw a 0.3% increase in August, and construction projects within the manufacturing sector jumped by 1.2%.
The housing market is facing a shortage of available homes for sale, which is driving investments in private residential projects, even though mortgage rates remain significantly high. Last week, the 30-year fixed mortgage rate averaged 7.31%, reaching the highest level since December 2000.
Despite the challenging landscape, this pattern seems to be the new normal. Spending on multi-family residential projects rose 0.6% in August, while spending on single-family home projects increased 1.7%.
Higher mortgage rates have been crippling the homebuilding market.
However, inflation has declined sharply over the past year thanks to the Fed’s monetary tightening campaign. Also, the labor market is showing signs of a slowdown. These trends have generated optimism.
The Federal Reserve said that it plans to implement another quarter percentage point interest rate hike in November, followed by potential rate cuts in 2024. This strategy is expected to lead to a reduction in mortgage rates, which is viewed as a favorable development for the housing market.
Lower mortgage rates have the potential to enhance affordability for homeownership, stimulating demand within the real estate sector.
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).
T. Rowe Price Global Real Estate Fund 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 2% and 1.1%, respectively. The annual expense ratio of 0.95% is lower than the category average of 1.21%. TRGRX has 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.
Fidelity Real Estate Income Fund seeks higher-than-average income and capital growth. FRIFX primarily invests its assets in preferred and common stocks of real estate investment trusts. Fidelity Real Estate Income Fund normally invests at least 80% of its assets in securities of companies principally engaged in the real estate industry and other real estate-related investments.
Fidelity Real Estate Income Fund has a 5-year and 10-year annualized return of 4.6% and 3.5%, respectively. The annual expense ratio of 0.99% is lower than the category average of 1.08%. FRIFX has 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.
Fidelity Real Estate Investment Portfolio fund aims for above-average income and long-term capital growth, consistent with reasonable investment risk. The majority of FRESX’s assets are invested in securities of companies principally engaged in the real estate industry and other real estate-related investments.
Fidelity Real Estate Investment Portfolio fund has three and five-year annualized returns of 4.4% and 3%, respectively. FRESX carries an expense ratio of 0.71% compared with the category average of 1.08%. Fidelity Real Estate Investment Portfolio carries a Zacks Mutual Fund Rank #1.
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3 Funds to Buy on Steady Expansion in Construction Activity
Spending on construction projects is steadily increasing even as inflation remains high and price pressures pose major challenges. However, inflation has been cooling lately, which is aiding the expansion of construction activity.
Homebuilding has been the mainstay of construction activity, but a contraction in the housing market saw investment in construction activity fizzling out. However, spending on private residential projects has once again started increasing, which is boosting construction activity.
Thus, funds like T. Rowe Price Global Real Estate Fund (TRGRX - Free Report) , Fidelity Real Estate Income Fund (FRIFX - Free Report) and Fidelity Real Estate Investment Portfolio (FRESX - Free Report) are likely to benefit in the near term.
Construction Spending Increases
Spending on construction projects rose a solid 0.5% to a seasonally adjusted annual rate of $1,983.5 billion in August, which came in line with economists’ expectations, the Commerce Department said on Oct 2. This follows 0.9% growth in July. Year over year, construction spending soared 7.4% in August.
Spending was once again driven by investments in private residential projects. Spending on private residential projects increased 0.6% in August after rising 1.6% in July. Overall, private construction projects spending increased 0.5% in August.
Construction spending totaled $1,284.7 billion in the first eight months of this year compared to $1,233.4 billion during the same period in 2022. Spending on private non-residential structures, such as factories, saw a 0.3% increase in August, and construction projects within the manufacturing sector jumped by 1.2%.
The housing market is facing a shortage of available homes for sale, which is driving investments in private residential projects, even though mortgage rates remain significantly high. Last week, the 30-year fixed mortgage rate averaged 7.31%, reaching the highest level since December 2000.
Despite the challenging landscape, this pattern seems to be the new normal. Spending on multi-family residential projects rose 0.6% in August, while spending on single-family home projects increased 1.7%.
Higher mortgage rates have been crippling the homebuilding market.
However, inflation has declined sharply over the past year thanks to the Fed’s monetary tightening campaign. Also, the labor market is showing signs of a slowdown. These trends have generated optimism.
The Federal Reserve said that it plans to implement another quarter percentage point interest rate hike in November, followed by potential rate cuts in 2024. This strategy is expected to lead to a reduction in mortgage rates, which is viewed as a favorable development for the housing market.
Lower mortgage rates have the potential to enhance affordability for homeownership, stimulating demand within the real estate sector.
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).
T. Rowe Price Global Real Estate Fund 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 2% and 1.1%, respectively. The annual expense ratio of 0.95% is lower than the category average of 1.21%. TRGRX has 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.
Fidelity Real Estate Income Fund seeks higher-than-average income and capital growth. FRIFX primarily invests its assets in preferred and common stocks of real estate investment trusts. Fidelity Real Estate Income Fund normally invests at least 80% of its assets in securities of companies principally engaged in the real estate industry and other real estate-related investments.
Fidelity Real Estate Income Fund has a 5-year and 10-year annualized return of 4.6% and 3.5%, respectively. The annual expense ratio of 0.99% is lower than the category average of 1.08%. FRIFX has 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.
Fidelity Real Estate Investment Portfolio fund aims for above-average income and long-term capital growth, consistent with reasonable investment risk. The majority of FRESX’s assets are invested in securities of companies principally engaged in the real estate industry and other real estate-related investments.
Fidelity Real Estate Investment Portfolio fund has three and five-year annualized returns of 4.4% and 3%, respectively. FRESX carries an expense ratio of 0.71% compared with the category average of 1.08%. Fidelity Real Estate Investment Portfolio carries a Zacks Mutual Fund Rank #1.
To view the Zacks Rank and past performance of all real estate funds, investors can click here to see the complete list of funds.
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