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5 Best-Performing Real Estate Mutual Funds Of Q1 2016

As the first quarter is drawing to a close, the housing industry remains firmer than what most believed. New residential construction was impressive in February, while rise in new single home sales indicated that there is momentum in the housing market. In March, the NAHB/Wells Fargo housing market index that reflects home builders’ sentiment continued to remain above the 50 mark, indicating improvement. Add to this low mortgage rates and strong employment report and you know why they sound so confident. Banking on these positive trends in the real estate industry, it will be wise to bet on fundamentally solid funds from this space. Upbeat New Residential Construction After a crippling east coast storm affecting housing starts in January, new residential construction bounced back in February as the spring selling season kicked off. Housing starts rose to 1.18 million in February from 1.12 million January, way above analysts’ estimates. Both privately owned housing starts for single-family and multifamily moved north. Starts also rose across all the geographies except for the Northeast. Builders are allocating more resources to multifamily construction to benefit from the current upbeat rental market. Moreover, construction outlay had already touched the highest level in January since Oct. 2007. In January, spending also rose a whopping 10.4% year over year. Building permits are a precursor to construction activity. It indicates the future growth of housing activities. While permits remained unchanged in January, it fell slightly in February. However, permits for single-family residences actually increased from 728,000 in January to 731,000 in February. New Residential Sales Gain, Sentiment Steady Sales of single family home in the U.S. rose 2% to a seasonally adjusted annual rate of 512,000 units in February. January’s sales figure was also revised up to 502,000 units. This is good news for the housing sector as new home sales account for about 9.2% of the housing market. Pending home sales also increased 3.5% from January to a seven-month high of 109.1 in February. This gain follows a 3.1% loss in January. Pending sales indicate upcoming sales activity. A sale is considered pending when the contract has been signed but the transaction hasn’t closed. Existing home sales, on the other hand, turned out be a bit disappointing in February. Sales of existing homes came in at 5.08 million, down 7.1% from January’s figure. Even though it’s a drop in numbers, it has followed January’s strongest rise in sales in six months at 5.47 million. Meanwhile, The National Association of Home Builders (NAHB)/Wells Fargo housing market index (HMI) remained flat at 58 in March. While it’s the lowest level in eight months, it’s still a good number. The index has remained well above the 50 mark for several months indicating a steady recovery. Top 5 Real Estate Funds of Q1 2016 As discussed above, most of the data related to homebuilding released this quarter suggest that housing activity is improving. This is borne out by the fact that the Real Estate SPDR (NYSEARCA: XLRE ) has gained 2.8% on a year-to-date basis. Moreover, historically low mortgage rates are expected to give the real estate industry a boost. Bankrate, Inc. (NYSE: RATE ) reported that in March the 30-year fixed rate mortgage dipped to a range of 3.56% to 3.6%. In February, the rate was at 3.65%. Further, jobs data in February painted a solid picture of the labor market, which will eventually increase demand for more residential complexes. The U.S. economy added 242,000 jobs in February, handily beating January’s upwardly revised job number of 172,000. Additionally, the unemployment rate in February remained unchanged at 4.9%. Residential investment also jumped 10.1% in the fourth quarter, compared with a rise of 8.2% in the third. It also surged 8.9% in 2015, exceeding 2014’s gain of only 1.8%. Moreover, democratic presidential candidates Hillary Clinton and Bernie Sanders have already promised to increase infrastructure investment in the future. Given these positive trends in the real estate industry, it will be prudent to invest in funds related to the housing space. Funds have been selected over stocks, since funds reduce transaction costs for investors and also diversify their portfolio without the numerous commission charges that stocks need to bear. Here we have selected five such real estate funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy), have given highest year-to-date return, offer minimum initial investment within $5000, carry a low expense ratio and possess no-sales load. Fidelity Real Estate Investment Portfolio (MUTF: FRESX ) invests the majority of its assets in securities of companies engaged in the real estate industry and other real estate-related investment. FRESX’s year-to-date return is 5.6%. FRESX carries a Zacks Mutual Fund Rank #2 and the annual expense ratio of 0.78% is lower than the category average of 1.29%. AMG Managers Real Estate Securities (MUTF: MRESX ) invests a major portion of its assets in stocks of companies principally engaged in the real estate industry, including Real Estate Investment Trusts. MRESX’s year-to-date return is 4.7%. MRESX carries a Zacks Mutual Fund Rank #2 and the annual expense ratio of 1.16% is lower than the category average of 1.29%. PIMCO Real Estate Real Return Strategy D (MUTF: PETDX ) seeks to achieve its investment objective by investing in real estate-linked derivative instruments backed by a portfolio of inflation-indexed securities and other Fixed Income Instruments. PETDX’s year-to-date return is 3%. PETDX carries a Zacks Mutual Fund Rank #2 and the annual expense ratio of 1.14% is lower than the category average of 1.29%. T. Rowe Price Real Estate (MUTF: TRREX ) invests a large portion of its assets in the equity securities of real estate companies. TRREX’s year-to-date return is 1.9%. TRREX carries a Zacks Mutual Fund Rank #1 and the annual expense ratio of 0.76% is lower than the category average of 1.29%. TIAA-CREF Real Estate Securities Retirement (MUTF: TRRSX ) invests a large portion of its assets in the securities of companies that are principally engaged in or related to the real estate industry, including those that own significant real estate assets. TRRSX’s year-to-date return is almost 1%. TRRSX carries a Zacks Mutual Fund Rank #2 and the annual expense ratio of 0.77% is lower than the category average of 1.29%. 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. Pick the best mutual funds with the help of Zacks Rank. Original Post

3 Strong Buy Mid-Cap Growth Mutual Funds

Mid-cap funds are an ideal investment option for investors looking for high return potential that comes with lower risk than their small-cap counterparts. Mid-cap funds are not very susceptible to volatility in broader markets, making it an ideal bet given that the macroeconomic conditions have generally offered a roller-coaster ride in recent years. Meanwhile, when capital appreciation over the long term takes precedence over dividend payouts, growth funds become a natural choice for investors. These funds focus on realizing an appreciable amount of capital growth by investing in stocks of firms whose value is projected to rise over the long term. However, a relatively higher tolerance to risk and the willingness to park funds for the longer term are necessary when investing in these securities. This is because they may experience relatively more fluctuations than other fund classes. Below we share with you three top-rated mid-cap growth mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the funds to outperform their peers in the future. Columbia Mid Cap Growth A (MUTF: CBSAX ) seeks capital appreciation. CBSAX invests a major portion of its assets in companies that have market capitalizations in the range of the companies listed in the Russell Midcap Index. CBSAX invests in stocks that have the potential for long term, above-average earnings growth. The Columbia Mid Cap Growth A fund has a three-year annualized return of 9.5%. CBSAX has an expense ratio of 1.19% as compared to the category average of 1.28%. T. Rowe Price Mid-Cap Growth (MUTF: RPMGX ) maintains a diversified portfolio by investing a large chunk of its assets in companies having market capitalizations similar to those listed in the S&P MidCap 400 Index or the Russell Midcap Growth Index. RPMGX invests in companies having above-average growth potential. Though RPMGX focuses on acquiring common stocks of domestic companies, RPMGX may also invest in companies located outside the U.S. The T. Rowe Price Mid-Cap Growth fund has a three-year annualized return of 13.4%. Brian W.H. Berghuis is the fund manager of RPMGX since 1992. MFS Mid Cap Growth Fund A (MUTF: OTCAX ) seeks growth of capital. A large chunk of OTCAX’s assets is invested in issuers having medium market capitalization. These issuers have a market cap identical to the ones listed in the Russell Midcap Growth Index for the previous 13 months. The MFS Mid Cap Growth A fund has a three-year annualized return of 11.1%. As of February 2016, OTCAX held 103 issues with 2.59% of its assets invested in Ross Stores Inc. (NASDAQ: ROST ). Original Post

Top ETF Stories Of First Quarter 2016

The start to the first quarter of 2016 was a nightmare, given the twin attacks from oil price slide and China turmoil that intensified fears of a global slowdown. However, these concerns started to fade in the back half of the quarter on continued signs of improvement in the domestic and international markets, pushing global stocks higher. Given this, several events have impacted the ETF world in either a positive or a negative way. Below, we have discussed some of them that dominated headlines and are worth watching in the next quarter: Fed Turned Dovish Again After pulling the trigger for the first rate hike in almost a decade in mid-December, the Fed turned dovish again this year. The cautious approach came on the heels of increased market volatility, global growth concerns, and softness in exports and business investments. In the March meeting, the Fed kept the short-term interest rates steady in the 0.25-0.50% band and dialed back its projection for this year’s hikes. The central bank now expects the federal funds rate to rise to 0.875% by the end of the year, implying two lift-offs, compared with 1.375% that signaled four rate hikes. Expectations of longer-than-expected lower rates have given a boost to the rate-sensitive sectors such as utilities and real estate and high-yield securities. In fact, many of the utility and dividend ETFs like the Vanguard Utilities ETF (NYSEARCA: VPU ) , the Utilities Select Sector SPDR ETF (NYSEARCA: XLU ) , the iShares U.S. Utilities ETF (NYSEARCA: IDU ) , the PowerShares S&P 500 High Dividend Portfolio ETF (NYSEARCA: SPHD ) , the First Trust Morningstar Dividend Leaders Index ETF (NYSEARCA: FDL ) and the ProShares S&P 500 Dividend Aristocrats ETF (NYSEARCA: NOBL ) have been hitting regular 52-week highs and are expected to move higher in the coming weeks (read: Dividend ETFs Hitting All-Time Highs Ahead of Fed Meet ). Though real estate ETFs have not made new highs, they are outperforming the broad market from a year-to-date look. Some of the top ranked funds are the Vanguard REIT Index ETF (NYSEARCA: VNQ ) , the iShares U.S. Real Estate ETF (NYSEARCA: IYR ) and the SPDR Dow Jones REIT ETF (NYSEARCA: RWR ) that are expected to continue their outperformance. Crazy Run of ‘The Oil’ Oil price has been seesawing between losses and gains touching 12-year lows in mid February and then spiraling back to the $40-per-barrel mark in mid March. This spectacular performance led to smooth trading in the overall energy space. In particular, stock-based energy ETFs like the PowerShares S&P SmallCap Energy Portfolio ETF (NASDAQ: PSCE ) , the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA: XOP ) and the First Trust ISE-Revere Natural Gas Index ETF (NYSEARCA: FCG ) surged at least 19% over the past one month. Futures-based energy ETFs like the United States Oil ETF (NYSEARCA: USO ) and the United States Brent Oil ETF (NYSEARCA: BNO ) gained 7% each (read: Crude Back to $40: Can Energy ETFs Sustain Their Rally? ). However, this impressive rally is too good to last as demand will not be enough to reduce the global supply glut. While U.S. producers have started to reduce output and OPEC is looking to freeze production at January levels, increased production from Kuwait, Saudi Arabia and Iran will continue to weigh on the price, thereby failing to rebalance the oil market at least in the short term. Further, PSCE and XOP have an unfavorable Zacks ETF Rank of 5 or ‘Strong Sell’ rating and 4 or ‘Sell’ rating, respectively, while FCG has a Zacks ETF Rank of 3. Japan Moves to Negative Rates In late January, Bank of Japan (BoJ) adopted measures similar to the European Central Bank (ECB) by pushing interest rates to the negative territory, minus 0.1%, for the first time. The aim is to revive growth in the world’s third-largest economy. The move sparked a rally in the Japanese ETFs while weakened the yen against the greenback. Some of the top ranked ETFs in this space are the WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) , the Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEARCA: DBJP ) , the WisdomTree Japan Hedged SmallCap Equity ETF (NASDAQ: DXJS ) and the iShares Currency Hedged MSCI Japan ETF (NYSEARCA: HEWJ ) . Negative interest rates in Japan had also accelerated the selling wave in the global banking sector in early February, which was already bearing the brunt of the tumultuous ride in the market. Nevertheless, the banking sector has been emerging from the crisis in recent weeks on a rebound in oil prices and improving global sentiments. Gold and Gold Miners Rocking After posting the third annual loss in 2015, gold has been on a tear this year as increased market volatility has perked up demand for the yellow metal as a store of value and a hedge against market turmoil. Additionally, the expectation for longer-than-expected low rates will continue to raise the appeal for the gold bullion. Notably, the SPDR Gold Trust ETF (NYSEARCA: GLD ) , the iShares Gold Trust ETF (NYSEARCA: IAU ) , the ETFS Physical Swiss Gold Trust ETF (NYSEARCA: SGOL ) and the Van Eck Merk Gold ETF (NYSEARCA: OUNZ ) are up about 17% each, from a year-to-date look. These funds have a Zacks ETF Rank of 3. Acting as a leveraged play on underlying metal prices, metal miners tend to experience more gains than their bullion cousins in a rising metal market. In particular, the iShares MSCI Global Gold Miners ETF (NYSEARCA: RING ) stole the show in terms of performance, surging 59.3%. This was followed by gains of 52.8% for the ALPS Sprott Junior Gold Miners ETF (NYSEARCA: SGDJ ) , 50.5% for the PowerShares Global Gold and Precious Metals Portfolio ETF (NASDAQ: PSAU ) and 50.3% for the Sprott Gold Miners ETF (NYSEARCA: SGDM ). Bottom Line Investors should closely watch the developments in these spaces as we head into the next quarter and should tap opportunities as and when they come. Link to the original post on Zacks.com