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Is T. Rowe Price Real Estate (TRREX) a Strong Mutual Fund Pick Right Now?
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On the lookout for a Sector - Real Estate fund? Starting with T. Rowe Price Real Estate (TRREX - Free Report) is one possibility. TRREX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
TRREX is one of many Sector - Real Estate funds to choose from. Sector - Real Estate mutual funds are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation. This technique makes securities in these funds high dividend players, and even bond-like in some instances, though their risk is similar to equities.
History of Fund/Manager
TRREX is a part of the T. Rowe Price family of funds, a company based out of Baltimore, MD. Since T. Rowe Price Real Estate made its debut in February of 1998, TRREX has garnered more than $3.74 billion in assets. The fund is currently managed by David M. Lee who has been in charge of the fund since February of 1998.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 8.63%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 5.84%, which places it in the top third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. TRREX's standard deviation over the past three years is 11.59% compared to the category average of 9.75%. Looking at the past 5 years, the fund's standard deviation is 12.52% compared to the category average of 9.63%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. TRREX lost 66.9% in the most recent bear market and outperformed its peer group by 2.98%. This might suggest that the fund is a better choice than its peers during a bear market.
Nevertheless, with a 5-year beta of 0.55, the fund is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a positive alpha of 1.41, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, TRREX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1.24%. So, TRREX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Real Estate ( TRREX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
This could just be the start of your research on TRREXin the Sector - Real Estate category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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Is T. Rowe Price Real Estate (TRREX) a Strong Mutual Fund Pick Right Now?
On the lookout for a Sector - Real Estate fund? Starting with T. Rowe Price Real Estate (TRREX - Free Report) is one possibility. TRREX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
TRREX is one of many Sector - Real Estate funds to choose from. Sector - Real Estate mutual funds are known to invest in real estate investment trusts (REITs). A popular income vehicle thanks to its taxation rules, a REIT is required to pay out at least 90% of its income annually to avoid double taxation. This technique makes securities in these funds high dividend players, and even bond-like in some instances, though their risk is similar to equities.
History of Fund/Manager
TRREX is a part of the T. Rowe Price family of funds, a company based out of Baltimore, MD. Since T. Rowe Price Real Estate made its debut in February of 1998, TRREX has garnered more than $3.74 billion in assets. The fund is currently managed by David M. Lee who has been in charge of the fund since February of 1998.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 8.63%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 5.84%, which places it in the top third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. TRREX's standard deviation over the past three years is 11.59% compared to the category average of 9.75%. Looking at the past 5 years, the fund's standard deviation is 12.52% compared to the category average of 9.63%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. TRREX lost 66.9% in the most recent bear market and outperformed its peer group by 2.98%. This might suggest that the fund is a better choice than its peers during a bear market.
Nevertheless, with a 5-year beta of 0.55, the fund is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a positive alpha of 1.41, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, TRREX is a no load fund. It has an expense ratio of 0.78% compared to the category average of 1.24%. So, TRREX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Real Estate ( TRREX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
This could just be the start of your research on TRREXin the Sector - Real Estate category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.