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According to Knight Frank Citi 2011 global real estate survey, Moscow, Sao Paulo and Munich are good cities though New York and London remain the top spots in terms of real estate investment. But honestly, who can afford it? Even if you can, there are hordes of practical and legal issues that make it virtually impossible to buy property abroad. That's when a real estate mutual fund makes sense.
ING Global Real Estate Retail offers a unique diversification. Not equity, bonds, money market instruments or gilts - we are talking about a different asset class altogether. To add to it, it is diverse across geographies and sectors and invested in around 100 stocks across minimum 10 countries.
You can make money by investing in real estate in India. But the added diversification across markets and a broader exposure to a larger opportunity set presents more access to alpha. A home market bias could limit the efficiency and alpha generation of an investor's real estate portfolio.
Take 2011, for instance. According to a report by Cohen & Steers, a New York based manager of portfolios specializing in US and international real estate securities, US REITs advanced 8.3 per cent, as measured by the FTSE NAREIT Equity REIT Index. The report went on to say that self storage REITs led all property sectors, followed by regional malls. Cyclical property sectors - industrial and hotels, underperformed, although apartment landlords gained on improving employment trends among college-educated workers.
However, performance diverged sharply across regions. Europe and Asia Pacific endured losses but Canada had the best return among developed markets. This proves our point - diversification effectively distributes risk among multiple markets (and sectors) to optimize potential for return. This is all the more relevant in the real estate market which is cyclical.
This fund has consistently delivered positive annual returns over the past three years - the only equity fund in India to do so. Its 3-year trailing returns are 23 per cent per annum!
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Some of the Top performing Mutual Funds are
- HDFC Top 200 Fund
- ICICI Prudential Dynamic Plan
- DSP BlackRock Top 100 Fund
- Birla Sun Life Front Line Equity Fund
- Reliance Equity Opportunities Fund
- IDFC Premier Equity Fund
- SBI Magnum Contra Fund
- Sundaram Select Midcap
- UTI Dividend Yield Fund
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