All stocks go in and out of favor. They promote their funds performance hoping investors will jump on the band wagon. Yes, if you are they type of investor who likes to trade stocks or mutual funds for short-term profits. Yes, if you are an income investor who wants to diversify his or her income portfolio for the long term. No, if you want current income but can not deal with a decline in the value of your real estate stock fund.
Real estate does lousy in a sluggish or poor economy.
Real estate stock funds can be used as a substitute for bonds. They also can reduce the volatility of a stock portfolio. Research by Wiesenberger shows that if you combine bonds, real estate stock funds and some cash in a portfolio, you can earn about the same as a bond with less risk. Your portfolio will not lose as much when interest rates rise and bond prices fall compared to a 100 percent stake in bonds. Ken Gregory, editor of the No-Load Fund Analyst, Orinda, Cal., recommends Columbia Real Estate and Brazos Real Estate funds.