Did You Overlook This Top-Performing Sector? – Vanguard Global Equity Inv (VHGEX)

If you’re looking for a fund that gives its managers a little more leeway and you can live with a few more bumps in the road, Third Avenue Real Estate Value Instl (MUTF:TAREX) may be right up your alley. This fund tends to eschew real estate investment trusts in favor of real estate operating companies. The management duo in charge here follows a strict pricing discipline, only buying stocks when they are trading at steep discounts to their estimated value. Both domestic and foreign names live side by side in the portfolio, with U.S. assets accounting for roughly one-quarter of total assets. Outside of the U.S., companies headquartered in Hong Kong, the U.K., Australia, and Canada make up the largest regional allocations.

Management has quite a bit of flexibility built into its mandate, so there’s a fair amount of wiggle room within the portfolio. For example, the fund owns home improvement retailer Lowe’s Companies, Inc. (NYSE:LOW) , purchased for its strong financial position, durable competitive position, and healthy cash flow. Because of its unique approach, Third Avenue Real Estate Value can move out of step with its peers at times, but over the long run the fund is a fine option for worldwide exposure to the real estate sector.

Don’t invest in global real estate funds expecting them to top the charts again in 2013, because they probably won’t. But adding a small international real estate allocation to your portfolio should help boost returns over the long run while providing an additional layer of diversification for your existing assets.

The article Did You Overlook This Top-Performing Sector? originally appeared on Fool.com and is written by Amanda Kish.

Amanda Kish is the Fool’s resident fund advisor for the Rule Your Retirement investment newsletter. She has no position in any stocks or funds mentioned. The Motley Fool recommends Lowe’s.

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