Real estate investment funds are combined sources of capital that are used to make a real estate investment. These investment funds are usually formed to pool in investor money and collectively purchase securities, which can include real estate, as well as stocks and bonds. There are different types of real estate investment funds, such as real estate mutual funds, real estate exchange-traded funds and real estate private equity funds. Investing in real estate funds offers several benefits. A significant advantage of using real estate investment funds is diversification which helps to reduce risk. Other notable benefits include a lower initial investment threshold and ability to be a passive investor as you do not need to deal with the management of the properties yourself.