If you're looking for a Sector - Real Estate fund category, then a potential option is T. Rowe Price Real Estate (TRREX - Free Report) . TRREX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
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
T. Rowe Price is based in Baltimore, MD, and is the manager of TRREX. T. Rowe Price Real Estate made its debut in February of 1998, and since then, TRREX has accumulated about $2.01 billion in assets, per the most up-to-date date available. The fund's current manager, Nina Jones, has been in charge of the fund since January of 2019.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of -2.26%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -4.96%, which places it in the bottom 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. Over the past three years, TRREX's standard deviation comes in at 17.73%, compared to the category average of 10.51%. The fund's standard deviation over the past 5 years is 16.45% compared to the category average of 10.71%. This makes the fund more volatile than its peers over the past half-decade.
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 underperformed its peer group by 3%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.89, which means it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. TRREX has generated a negative alpha over the past five years of -7.39, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, TRREX is a no load fund. It has an expense ratio of 0.77% compared to the category average of 1.26%. From a cost perspective, TRREX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Overall, T. Rowe Price Real Estate ( TRREX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and lower fees, T. Rowe Price Real Estate ( TRREX ) looks like a somewhat average choice for investors right now.
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