To try an active fund that could potentially excel in up and down markets, consider Cohen & Steers Realty Shares (CSRSX), which returned 9.5% annually during the past 10 years, topping the Vanguard index fund by 1 percentage point. The Cohen & Steers managers are willing to move away from the index, overweighting real estate sectors that appear undervalued.

The fund currently has a sizable position in retail properties, including malls and shopping centers. Shares of some malls have softened as investors worry that hard-pressed consumers could skimp on purchases or shop on the Internet.

But the Cohen & Steers managers figure that premier malls will hold their positions because of their strategic locations and popular stores. Portfolio manager Chip McKinley likes Simon Property Group (SPG). Simon operates dominant facilities that have been increasing their sales as upscale consumers patronize their favorite stores. "The low-quality malls may have difficulties, but Simon's premier malls should stand up to the competitive pressures from the Internet," says McKinley.

McKinley also likes premier office REITs, including Vornado Realty (VNO), which has properties in New York and Washington. Growing employment in social network and technology companies is increasing demand for space. But supplies of new space are limited because of the lingering effects of the financial crisis. During the downturn, building prices declined. Since then prices have strengthened, but it is still cheaper to buy an existing building than it is to build a new one. As a result, cautious lenders are reluctant to finance new construction. That should enable Vornado to raise rents on its existing properties and deliver increased earnings.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.

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