Investing in the real estate sector adds stability to a portfolio, mainly because the volatility in property prices is far less than what is experienced by stocks. Hence, investors willing to hold long-term positions would do well to consider real estate mutual funds as they add stability and bring steady returns to a portfolio. This category of funds also offers superior protection against inflation and is a solid investment choice.

Below we share with you three best-rated real estate mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.

Fidelity Series Real Estate Equity (FREDX - Free Report) invests the majority of its assets in real estate companies and in other real estate related investments. FREDX seeks long-term appreciation of capital and above-average income growth. Fidelity Series Real Estate Equity has a three-year annualized return of 9.6%.

Samuel Wald is the fund manager of FREDX since 2011.  

JHFunds2 Real Estate Securities 1 (JIREX - Free Report) seeks long-term capital growth and current income. JIREX invests the lion’s share of its net assets in equities of REITs and real estate companies. The fund may invest nearly 10% of its total assets in securities of non-U.S. real estate companies. JHFunds2 Real Estate Securities1 has a three-year annualized return of 10.1%.

As of February 2017, JIREX held 47 issues, with 5.90% of its assets invested in Simon Property Group Inc.   

Fidelity Advisor Real Estate Income A (FRINX - Free Report) invests heavily in debt and mortgage-backed securities of real estate companies and preferred and common stocks of REITs. FRINX invests a bulk of its assets in securities of real estate companies and other real estate related investments. Fidelity Advisor Real Estate Income A has a three-year annualized return of 7.2%.

FRINX has an expense ratio of 1.03% compared with the category average of 1.04%.  

To view the Zacks Rank and past performance of all real estate funds, investors can click here to see the complete list of funds.