A mutual fund is a professionally managed investment pool that reflects the performance of many different securities, such as stocks and bonds. Investors can purchase shares of a mutual fund just like the stock of a company. The value of mutual fund shares is calculated once a day based on the fund's current net asset value, or NAV.

Real estate mutual funds invest in real estate securities from around the world, although a large number of global funds specifically exclude holdings from the United States and/or Canada. Investments in the mutual fund portfolio may range from real estate stocks to real estate bonds, convertible securities and the securities of real estate investment trusts, or REITs.

A REIT is a company that buys and manages real estate on behalf of its own investors. On the surface, this seems like a mutual fund, except that REITs invest in physical property rather than securities, and they actually manage the properties to generate revenue. They also have different tax and dividend distribution rules than real estate mutual funds.

A real estate mutual fund offers an alternative for purchasing investment property. Global funds allow investors to target access in the highest demand areas for real estate in the entire world, such as Hong Kong, China, Japan and London.

Fidelity International Real Estate Fund

The Fidelity International Real Estate Fund targets capital appreciation, meaning it is intended as a buy-and-hold investment with a long-term growth outlook. It invests in non-U.S. real estate securities, mostly common stock, and attempts to allocate investments across many different countries and regions.

The fund is large; by August 2015, it had accumulated almost $397 million in net assets. It is listed as a medium core style fund according to the Morningstar Style Box. The majority of holdings in the fund's portfolio are international mid-cap stocks.

The Fidelity International Real Estate Fund has a net expense ratio of 1.38%, which is a little high for the segment. One reason management is relatively expensive is average annual turnover for the fund is 59%. The 12b-1 load for shares is 0.25%. Because this fund runs a little aggressive, these fees seem average or below-average during booming periods but also excessively large when returns are poor.

Just 2.3% of holdings are from North America, which is nearly 95% less than the category average. This means more weight is given to Europe, particularly the United Kingdom, and Asia. Other large country holdings include Japan, Australia and Singapore.

VALIC Company I Global Real Estate

Though not widely known outside of the segment, the VALIC Company I Global Real Estate Fund is among the most competitive global real estate mutual funds. The fund is offered and advised through the Variable Annuity Life Insurance Company, or VALIC. The fund has two subadvisors: Invesco Advisers, Inc. and Goldman Sachs Asset Management.

Unlike the previous fund in this list, this mutual fund does not shy away from investing in the U.S. Forty-two percent of all assets are invested in U.S. real estate stocks or REITs, with a focus on larger medium-cap or smaller large-cap companies. The benchmark for this fund is the FTSE EPRA/NAREIT Developed Index.

Net expenses for VALIC Company I Global Real Estate are 0.86%, which is below average for the segment. Turnover is approximately average at 41%. The low expenses help boost the fund's status among those with a long-term horizon.

The VALIC Company I Global Real Estate portfolio is filled with familiar names, such as Mitsubishi Estate, American Tower Corp, ProLogis, Inc. and Simon Property Group. The management team likes companies that show long histories of high revenue generation for commercial properties and is willing to trade some potential value investing play for known entities.

Third Avenue Real Estate Value Fund

This is the global real estate fund for dyed-in-the-wool fundamental investors with plenty to invest. At more than $3 billion in assets, the Third Avenue Real Estate Value Fund is a giant in the category. It is also one of the most consistent; it carries a high-profile management staff and is a darling of the rating agencies.

Morningstar gives the Third Avenue Real Estate Value Fund a five-star rating out of five. The S&P Capital IQ system also awards top marks, and U.S. News & World Report lists the fund as the best in the global real estate category. These accolades are not without good reason; this fund has a 0.67 beta and 6.14 alpha against the standard index, and volatility is low for the segment. Turnover is just 14%, which helps reduce expenses.

There is one major drawback to the Third Avenue Real Estate Value Fund; it is only designed for institutional investors. The minimum investment amount for this mutual fund is a staggering $100,000.

The Third Avenue Real Estate Value Fund carries an interesting portfolio. Only 75% of its assets are actually invested in real estate or REIT securities. Upwards of 17% of the portfolio is held as cash or cash-like investments, and management is not afraid to short positions, go long or simply sit on liquid accounts until the right opportunity arrives. The fund also carries financial services, consumer cyclicals and basic materials equities.

DFA International Real Estate Securities Portfolio

The DFA International Real Estate Securities Portfolio focuses on non-U.S. real estate investment trusts and other REIT-like entities. This fund is hugely popular at $3.3 billion in assets, in large part because of its focus on cutting costs and reducing turnover.

The fund carries a net expense ratio of just 0.28%, which is one of the lowest in the category and is more than 75% below the average global real estate stock. The fund managers use a market capitalization-weighted approach to select stocks. This mutual fund does not try to outpace the market aggressively; rather, it simply picks large, successful real estate companies around the world and offers very efficient returns to shareholders.

This fund is stable and strong but does not win any race for the best returns over any given year. Instead, the DFA International Real Estate Securities Portfolio is for long-term investors who hate fees and want to be able to understand their fund's underlying investment philosophies. It has a 0.85 beta against the best-fit index and a trailing five-year Sharpe ratio of 0.73. As of August 2015, the DFA International Real Estate Securities Portfolio has a trailing 12-month yield of 6.28%.

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