A Real Estate Mutual Fund that Succeeds With Limited REIT Holdings

Baron Real Estate has cashed in by owning everything from builders to cruise lines.

Mutual funds that focus on real estate investment trusts—owners of apartments, offices and other types of property—have, on average, lost money over the past year. But a few real estate funds have notched double-digit gains. How? Mostly by avoiding REITs.

Baron Real Estate (BREFX), for example, had just 30% of its assets in REITs at last report, compared with 94% for the typical real estate fund. Manager Jeffrey Kolitch has the bulk of his fund’s assets in other kinds of firms tied to real estate, such as homebuilders, lodging companies, suppliers of construction materials and even cruise lines (“hotels on the water,” he calls them). Many of these stocks have left REITs in the dust as real estate has recovered in recent years, and Kolitch expects the trend to continue as housing and other types of real estate continue to prosper.

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Daren Fonda
Senior Associate Editor, Kiplinger's Personal Finance
Daren joined Kiplinger in July 2015 after spending more than 20 years in New York City as a business and financial writer. He spent seven years at Time magazine and joined SmartMoney in 2007, where he wrote about investing and contributed car reviews to the magazine. Daren also worked as a writer in the fund industry for Janus Capital and Fidelity Investments and has been licensed as a Series 7 securities representative.