a portfolio. This is because the volatility in property prices is far less compared to the kind experienced by stocks. Adding such funds to a widely diversified portfolio would increase returns while reducing the associated risk significantly.

Below we will share with you 5 top rated real estate mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all real estate funds, then click here.

Oppenheimer Real Estate A (NASDAQ:OREAX - News) utilizes the majority of the fund’s assets to purchase equity securities, such as common stocks of companies form the real estate sector. It may also consider parking funds in real estate operating companies. The real-estate fund returned 10.36 % over the last one year period.

The real estate mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.49% compared to a category average of 1.40%.

Goldman Sachs US Real Estate A (NASDAQ:GREAX - News) seeks capital appreciation and dividend income. The fund utilizes a large proportion of its assets to purchase equity securities of companies from the real estate sector or those with linkages to the industry. The real-estate mutual fund has a three year annualized return of 15.82%.

James Otness is the Fund Manager and he has been managing this real estate fund since 2009.

Principal Real Estate Securities R2 (PRENX) invests heavily in equity securities of real estate companies. The fund also invests in real estate investment trusts and companies with significant real estate assets, such as paper, lumber hotel and entertainment firms. The real-estate mutual fund has a ten year annualized return of 10.59%.

The real estate mutual fund has an expense ratio of 1.58% compared to a category average of 1.40%.

Franklin Real Estate Securities A (NASDAQ:FREEX - News) seeks both current income and capital growth. Real estate investment trusts and companies which derive at least half of their revenues from operations in the real estate sector constitute its major investments. The real-estate fund returned 12.02% over the last one year period.

As of September 2011, this real estate mutual fund held 46 issues, with 11.88% of its total assets invested in Simon Property Group, Inc.

John Hancock Real Estate Securities (NASDAQ:JIREX - News) invests a large proportion of its assets in equity securities issued by real estate investment trusts and companies. Not more than 10% of its assets may be invested in foreign firms. The real-estate mutual fund has a five year annualized return of 6.63%.

John F. Robertson is the Fund Manager and he has been managing this real estate fund since 2005.

To view the Zacks Rank and past performance of all real estate mutual funds, then click here.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.

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