24 Sep

Performance Drivers, Portfolio Composition of 3 Real Estate Funds

WRITTEN BY Pete Raine FEATURED IN Macroeconomic Analysis

Top holdings drive performance 

The T. Rowe Price Real Estate Fund (TRREX), the Cohen & Steers Realty Shares (CSRSX), and the Fidelity Real Estate Investment Portfolio (FRESX) have a large portion of their assets allocated to domestic US equities. As of June 30, 2015, the top ten holdings of the T. Rowe Price Real Estate Fund (TRREX) constituted 47.2% of the portfolio. The top ten holdings of the Cohen & Steers Realty Shares (CSRSX) constitute 56.5% of the portfolio, and the top ten holdings of the Fidelity Real Estate Investment Portfolio (FRESX) constitute 46.7%.

In terms of holdings, TRREX has the smallest number of holdings among the three funds at 38. CSRSX has a total of 42 holdings, while FRESX has a total of 49 holdings.

Performance Drivers, Portfolio Composition of 3 Real Estate Funds

For CSRSX, Simon Property Group (SPG) makes up 10.25% of the portfolio. The next two top holdings are Equity Residential (EQR) and Vornado Realty Trust (VNO). The above chart of the weekly price changes of the fund and its major holdings shows that the fund largely follows the Simon Property Group performance. The chart also shows the movement of the weekly change in the price of SPG and CSRSX for the last five years.

Performance Drivers, Portfolio Composition of 3 Real Estate Funds

Similarly, FRESX’s prices follow its major holding Public Storage (PSA). A weekly change in prices over the last five years is shown in the above graph.

Performance Drivers, Portfolio Composition of 3 Real Estate Funds

The top holding of TRREX is AvalonBay Communities (AVB). The weekly change in prices for the last five years is shown in the above graph.

The movement in prices for all three funds shows a close relationship to the performance of the top holding in each portfolio. This emphasizes the strong positive correlation between the various segments of the real estate sector.

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