Funds Get Real Amid Unreal Housing Market

For CGM Realty, the top-performing real estate fund for the one-, three-, and five-year periods (see table below), the focus is on industrial and office space. As of the end of June, the most recent period for which this information is available, the fund had 28.6% of its assets in the industrial and office category. It had another 23.4% of its assets in retail real estate investment trusts (REITs). Interestingly, unlike some other pure-play real estate funds, CGM Realty also invests in materials stocks—concentrating on materials that are used to build real estate.

"A sputtering domestic economy notwithstanding, it is to a large extent world market forces that determine rising commodity prices, not solely U.S. consumer demand," says Robert Kemp, president of CGM, which had 33.8% of the fund's assets in materials stocks as of the end of June.

First American Real Estate Securities, a top performer for the three- and five-year periods, has a more traditional strategy, investing only in REITs or other real estate stocks. Its top holdings, as of June, were Simon Property Group, ProLogic, and Boston Property.—Beth Piskora

Contact Beth Piskora, managing editor Standard & Poor's Equity Research, at [email protected].