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Specialized Funds: Real Estate

Specialized funds focus on nontraditional asset classes that allow you to potentially gain exposure to very narrow segments of the market or very specific investing methodologies.

Reasons to consider real estate funds

  • Offer diversification beyond traditional stocks and bonds
  • Act as a potential hedge against inflation due to the tendency of real estate values and rents to increase when inflation is increasing
  • Are historically less correlated to other investments

Risks are inherent in all investments and real estate mutual funds are no different. Typical risks include market risk, interest rate risk, default risk of debt related investments, and a drop in real estate values.

Fidelity real estate focused funds

Fidelity's suite of real estate mutual funds includes five portfolios of differing investment strategies. They range from a passively managed real estate index fund to four actively managed portfolios invested in varying combinations of common stocks, bonds, preferred stocks, securities of real estate investment trusts (REITS) and commercial mortgage backed securities (CMBS).

Fund Name Objective Typical Holdings
Core Funds
Fidelity Real Estate Investment Portfolio (FRESX) Seeks above-average income and long-term capital growth, consistent with reasonable investment risk. May be appropriate for investors searching for a more balanced possibility for some income and fund value appreciation. Common stocks
Spartan Real Estate Index Fund (FRXIX) Seeks to provide investment results that correspond to the total return of equity REITs and other real estate-related investments. Common stocks
Specialized Funds
Fidelity Real Estate Income Fund (FRIFX) Seeks higher than average income and, as a secondary objective, the fund also seeks capital growth. May be appropriate for investors searching for income rather than fund value appreciation. Common stocks, bonds, preferred stocks, CMBS
Fidelity International Real Estate Fund (FIREX) Seeks capital appreciation. Common stocks
Fidelity Select Construction and Housing Portfolio (FSHOX) Seeks capital appreciation. Common stocks

Questions?

Interview with Steve Buller and Sam Wald (08:16)

Watch a brief video to hear two of our real estate sector portfolio managers discuss the potential benefits of REITs and some of the advantages that Fidelity enjoys in real estate investing.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information.  Read it carefully.
Diversification does not ensure a profit or guarantee against a loss.
Real Estate is a cyclical industry that is sensitive to interest rates, economic conditions (both nationally and locally), property tax rates, and other factors.
Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.
Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks.
Non-diversified funds can be more volatile because they can invest a greater portion of their assets in securities of a smaller number of individual issuers.
Changes in real estate values or economic conditions can have a positive or negative effect on issuers in the real estate industry, which may affect the fund.
Fixed income investments entail interest rate risk (as interest rates rise bond prices usually fall), the risk of issuer default, issuer credit risk and inflation risk.
Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds.
The value of the fund's domestic and foreign investments will vary from day to day in response to many factors.
Select Construction and Housing Portfolio: Investments in foreign securities, especially those in emerging markets, involve risks in addition to those of U.S. investments, including increased political and economic risk, as well as exposure to currency fluctuations. Because FMR concentrates the fund's investments in a particular industry, the fund's performance could depend heavily on the performance of that industry and could be more volatile than the performance of less concentrated funds and the market as a whole. The fund is considered non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund; thus changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a more diversified fund. The construction and housing industry can be significantly affected by changes in government spending, interest rates, consumer confidence and spending, taxation, demographic patterns, housing starts, and the level of new and existing home sales.

Past performance is no guarantee of future results.

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