NEW YORK ( TheStreet) -- Since the financial crisis, real estate has ranked as the top mutual fund category tracked by Morningstar. During the past three years, real estate funds have returned 22.4% annually, compared to 13.5% for the S&P 500.The big gains can be traced to a rally in REITs (real estate investment trusts), the primary holdings of real estate mutual funds. REITs invest in portfolios of commercial properties, such as offices and malls. As the economy has improved, investors have begun wagering on a revival of property markets. REITs have held special appeal because they pay rich dividends, an asset that many investors have come to crave in today's low-yield environment.
A Red-Hot Fund Plays the Housing Revival
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