During a volatile period, U.S. real estate stocks outperformed the broader U.S. equity market amid generally positive performance from the real estate subsectors. The office and industrial segment remained strong due to firm fundamentals for data centers, which have benefited from increased demand leading to high levels of pre-leasing on existing supply pipelines. The industrial and health care subsectors also turned in solid performance. Self-storage real estate stocks pulled back for the period. The lodging and leisure segment also ended the quarter modestly lower.
The Real Estate Fund returned 4.64% in the quarter compared with 5.36% for the Lipper Real Estate Funds Index and 5.99% for the Wilshire US Real Estate Securities Index. For the 12 months ended June 30, 2016, the fund returned 20.19% versus 18.18% for the Lipper Real Estate Funds Index and 23.55% for the Wilshire US Real Estate Securities Index. The fund's average annual total returns were 20.19%, 11.67%, and 6.76% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 0.76% as of its fiscal year ended December 31, 2015.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The Real Estate Fund charges a 1%
redemption fee on shares held 90 days or less.
The performance information shown does not reflect the deduction of the redemption fee;
if it did, the performance would be lower.
We believe that high-quality assets in high-barrier-to-entry markets run by skilled management teams drive superior performance within the real estate sector over the long term. Our largest industry weighting is to regional malls, where we own a portfolio of high-quality assets located in attractive real estate markets that tend to produce stable and growing cash flows. We also have a large weighting in the apartment/residential segment, where strong demand has boosted rent increases. We prefer property managers operating in markets where the cost of homeownership is high.
While May's U.S. monthly jobs report was a cause for concern, the rebound in June was quite welcome. Continued job growth against a background of modest supply is encouraging for U.S. real estate fundamentals. The majority of our portfolio focuses on domestic assets with exposure to the U.S. dollar, which could provide further insulation from global uncertainties and appeal to investors seeking income from such assets. In the third quarter, S&P Dow Jones indexes will create a separate real estate Global Industry Classification Standard (GICS), which should draw additional attention to real estate securities.