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Real Estate Funds for a Retirement Portfolio

07/01/2019 5:00 am EST

Focus: FUNDS

Robert Carlson

Editor, Retirement Watch

In U.S. markets, real estate investment trusts (REITs) continue to be leaders. This remains a good economic environment for REITs, and we own them through one of the leading funds, notes Bob Carlson, ETF and mutual fund expert and editor of Retirement Watch.

Cohen & Steers Realty Shares (CSRSX) is up 3.52% over the last four weeks 23.19% for the year to date. CSRSX first develops an outlook for the economy. Then, it determines how that forecast will affect different commercial real estate sectors.

Finally, CSRSX uses its deep knowledge of REITs to select those most likely to benefit from the outlook and own quality properties, have quality management and sell at reasonable prices. The fund tends to focus on relatively few REITs. It recently owned 50 REITs and had 50% of the fund invested in its 10 largest positions.

The top positions in the fund were American Tower (AMT), Equinix (EQIX), Welltower (WELL), UDR (UDR) and Prologis (PLD). Top REITs sectors in the fund were apartments, infrastructure, data centers, health care and self-storage.

We also own both REITs and preferred securities through Cohen & Steers REIT & Preferred Income (RNP). The exchange-traded fund is up 4.78% in the last four weeks and 25.88% for the year to date. The yield is 6.85%.

The fund is about evenly split between REITs and preferred securities. In addition, the fund largely mirrors the holdings of Cohen & Steers funds dedicated to those investments.

The fund uses about 24% leverage. It recently sold at a 7.65% discount to net asset value, which is down from the 10.09% six-month average discount.

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