For the one-year period ended May 31, the 32 funds in the real estate category averaged returns of 13.61%, while the three-year average annual compound yield through May was 15.62%, and the five-year annualized figure was 10.63%. Some funds posted yearly returns approaching 20%.

The average return for real estate funds during May was negative 1.63%, and the average three-month figure through May was a mere 0.01%. Real estate investments are suffering right now because of fears of further interest rate hikes, but they're still an interesting investment.

Oscar Belaiche, vice-president at Dynamic Funds in Toronto, and portfolio manager of the Dynamic Focus+ Real Estate Fund, also believes that the recent downturn was a temporary correction, rather than being indicative of a prolonged bear market.

People have been buying anything to do with tangible assets -- resource firms, hydro stations, airports, anything that generates cash flow. Charles Dillingham, vice-president at Morguard Financial Corp. in Toronto and portfolio manager of the CIBC Canadian Real Estate Fund, also concurs with Messrs. Gagnon and Belaiche's assessment of future prospects for the real estate sector.

While Mr. Gagnon rounds out his fund's portfolio with income trusts in the industrial, energy, consumer, utility and telecommunications sectors, Messrs. Belaiche and Dillingham hold Canadian equities as well as real estate outside Canada. 

By M. Sese
http://realestatepress.org