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Grab These 2 Real Estate Funds as Construction Spending Rebounds
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After months of struggle, spending on construction projects has been steadily gaining momentum. Construction spending increased for the second consecutive month in April, driven largely by stronger investment in private-sector projects.
The housing market has been a key contributor to the overall rise in construction activity. Although elevated mortgage rates and higher tariffs have continued to create obstacles for the industry, solid demand for single-family homes has supported increased spending on residential developments.
Given the upbeat sentiment, it would be ideal to invest in funds like Fidelity Real Estate Investment Portfolio (FRESX - Free Report) and JHancock Real Estate Securities Fund Class 1 (JIREX - Free Report) .
Construction Spending Rebounds
The Commerce Department reported that construction spending climbed 0.4% in April from the previous month, following a 0.2% increase in March and exceeding analysts' expectations for another 0.2% gain.
Compared with the same period a year earlier, construction spending climbed 0.9% in April. Much of the improvement came from private construction activity, which advanced 0.4% after rising 0.2% in March.
Spending on residential construction projects also strengthened, increasing 0.8% in April after posting a 0.6% gain the month before.
The construction sector has faced a variety of challenges in recent months. Stubborn inflation and the ongoing conflict with Iran have helped keep mortgage rates elevated, while tariffs have contributed to higher home prices.
Even so, housing demand has remained resilient. The National Association of Realtors reported that existing home sales jumped 3.2% in May to a seasonally adjusted annual pace of 4.17 million units from 4.02 million in April. Homebuilders continue to navigate the pressures created by higher borrowing costs.
However, demand for newly built homes remains strong, and industry sales could accelerate further if mortgage rates begin to decline.
2 Best Choices
As a result, we’ve chosen two 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).
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 9.2% and 4.4%, respectively. FRESX carries an expense ratio of 0.62% compared with the category average of 1.01%. Fidelity Real Estate Investment Portfolio carries a Zacks Mutual Fund Rank #1.
JHancock Real Estate Securities Fund Class 1 seeks appreciation of capital and current income over the long term. JIREX invests primarily in the equity securities of companies engaged in operations related to the real estate sector, which includes real estate investment trusts. JHancock Real Estate Securities Fund Class 1 invests in securities like common stocks, preferred stocks and convertible securities.
JHancock Real Estate Securities Fund Class 1 has a 3-year and 5-year annualized return of 10.6% and 4.7%, respectively. The annual expense ratio of 0.86% is lower than the category average of 0.95%. JIREX 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.
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Grab These 2 Real Estate Funds as Construction Spending Rebounds
After months of struggle, spending on construction projects has been steadily gaining momentum. Construction spending increased for the second consecutive month in April, driven largely by stronger investment in private-sector projects.
The housing market has been a key contributor to the overall rise in construction activity. Although elevated mortgage rates and higher tariffs have continued to create obstacles for the industry, solid demand for single-family homes has supported increased spending on residential developments.
Given the upbeat sentiment, it would be ideal to invest in funds like Fidelity Real Estate Investment Portfolio (FRESX - Free Report) and JHancock Real Estate Securities Fund Class 1 (JIREX - Free Report) .
Construction Spending Rebounds
The Commerce Department reported that construction spending climbed 0.4% in April from the previous month, following a 0.2% increase in March and exceeding analysts' expectations for another 0.2% gain.
Compared with the same period a year earlier, construction spending climbed 0.9% in April. Much of the improvement came from private construction activity, which advanced 0.4% after rising 0.2% in March.
Spending on residential construction projects also strengthened, increasing 0.8% in April after posting a 0.6% gain the month before.
The construction sector has faced a variety of challenges in recent months. Stubborn inflation and the ongoing conflict with Iran have helped keep mortgage rates elevated, while tariffs have contributed to higher home prices.
Even so, housing demand has remained resilient. The National Association of Realtors reported that existing home sales jumped 3.2% in May to a seasonally adjusted annual pace of 4.17 million units from 4.02 million in April. Homebuilders continue to navigate the pressures created by higher borrowing costs.
However, demand for newly built homes remains strong, and industry sales could accelerate further if mortgage rates begin to decline.
2 Best Choices
As a result, we’ve chosen two 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).
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 9.2% and 4.4%, respectively. FRESX carries an expense ratio of 0.62% compared with the category average of 1.01%. 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.
JHancock Real Estate Securities Fund Class 1 seeks appreciation of capital and current income over the long term. JIREX invests primarily in the equity securities of companies engaged in operations related to the real estate sector, which includes real estate investment trusts. JHancock Real Estate Securities Fund Class 1 invests in securities like common stocks, preferred stocks and convertible securities.
JHancock Real Estate Securities Fund Class 1 has a 3-year and 5-year annualized return of 10.6% and 4.7%, respectively. The annual expense ratio of 0.86% is lower than the category average of 0.95%. JIREX 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.
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 >>