IARIX - Invesco Real Estate Fund Institutional Class

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Invesco Real Estate Fund Institutional Class (IARIX)
Expense Ratio: 0.91%
Expected Lifetime Fees: $27,352.50

The Invesco Real Estate Fund Institutional Class fund (IARIX) is a Real Estate fund started on 04/30/2004 and has $2.30 billion in assets under management. The current manager has been running Invesco Real Estate Fund Institutional Class since 05/25/1995. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

Vanguard REIT Index ETF (VNQ)
Expense Ratio: 0.10%
Expected Lifetime Fees: $3,271.86

The Vanguard REIT Index ETF (VNQ) is an Exchange Traded Fund. It is a "basket" of securities that index the Real Estate investment strategy and is an alternative to a Real Estate mutual fund. Fees are very low compared to a comparable mutual fund like Invesco Real Estate Fund Institutional Class because computers automatically manage the stocks.

The Following Real Estate Funds Have Lower Fees Than Invesco Real Estate Fund Institutional Class (IARIX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
CGM Realty CGMRX 69.0% 1,600 0.88%
Cohen & Steers Instl Realty Shares CSRIX 92.0% 2,200 0.75%
Columbia Real Estate Equity Fund Class R5 CRRVX 72.0% 540 0.84%
Davis Real Estate Y DREYX 68.0% 249 0.79%
DFA Real Estate Securities I DFREX 3.0% 3,500 0.22%
DWS RREEF Real Estate Securities Inst RRRRX 107.0% 1,400 0.61%
DWS RREEF Real Estate Securities S RRREX 107.0% 1,400 0.74%
Fidelity Advisor Real Estate Income Fund Institutional Class FRIRX 25.0% 2,400 0.89%
Fidelity Real Estate Investment FRESX 25.0% 3,400 0.85%
ING Real Estate Instl CRARX 43.0% 983 0.86%
JPMorgan Realty Income Instl URTLX 141.0% 665 0.78%
Neuberger Berman Real Estate I NBRIX 28.0% 511 0.85%
PIMCO Real Estate Real Return Strategy I PRRSX 287.0% 2,700 0.74%
PIMCO Real Estate Real Return Strategy P PETPX 287.0% 2,700 0.84%
Principal Real Estate Securities Inst PIREX 29.3% 1,400 0.85%
T. Rowe Price Real Estate TRREX 4.9% 3,500 0.78%
TIAA-CREF Real Estate Sec Instl TIREX 75.0% 1,100 0.57%
TIAA-CREF Real Estate Sec Premier TRRPX 75.0% 1,100 0.72%
TIAA-CREF Real Estate Sec Retail TCREX 75.0% 1,100 0.84%
TIAA-CREF Real Estate Sec Retire TRRSX 75.0% 1,100 0.82%
Vanguard REIT Index Inst VGSNX 10.0% 24,300 0.08%
Vanguard REIT Index Inv VGSIX 10.0% 24,300 0.24%
Vanguard REIT Index Signal VGRSX 10.0% 24,300 0.10%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.