4 Best-Performing Real Estate Mutual Funds So Far In 2020

The real estate industry has demonstrated remarkable strength even as the coronavirus pandemic keeps rattling the U.S. economy. A low interest rate environment, resulting in record low mortgage rates, has boosted construction activity in the country.

Thanks to the Federal Reserve’s decision to keep its benchmark interest rates unchanged at near zero on Jul 29, mortgage rates are expected to hover around record-low levels. The Fed’s federal fund rate remains within a range of 0% to 0.25%, and was trimmed in mid-March as the coronavirus pandemic made serious damage to the economy.

Now, mortgage rates in the United States generally follow the direction of the 10-year Treasury note yield and bond yields generally decline when prices rise. This low mortgage rate will certainly appeal to customers and bode well for real estate funds. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 2.99% for the week ending Jul 30.

The 30-year fixed-rate mortgage rate has again fallen below the 3% mark for the second time in one month. In the week ending Jul 16, the 30-year mortgage average has hit another all-time low of 2.98%. This makes it clear that the pandemic is constantly putting pressure on the real estate industry and pushing mortgage rates to historic lows this year.

On Jun 24, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported that sales of new single-family houses in June rose to 776,000, beating the prior month’s reading of 682,000. The figure is 13.8% above May’s sales and surpassed the consensus estimate of 695,000. And this is a result of the low-rate environment.

4 Funds to Buy

Given the current uptrend, we have selected four real estate mutual funds that stand to gain from record low mortgage rates. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). In addition, the minimum initial investment for these funds is within $5,000. We expect these funds to outperform their peers in the future.

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