3 Real Estate Funds That Still Offer Real Benefits

In a year when broad equity markets have risen by double digits, real estate stocks have been a disappointment. The Morningstar US Market Index gained 17.0% for the year through October 2025, while the Morningstar US Real Estate Index gained 3.8%. Relatively high interest rates have been a headwind, increasing borrowing costs and eroding property values. Remote work and online shopping, among other secular demand changes, have also been a challenge.

The benefits of owning REITs and other property-related investments still hold true, though. As “real assets,” the income they generate from leases and rents tends to rise with inflation, offering a hedge against rising prices. They also offer diversification beyond what most individual investors, who won’t directly own much property besides their homes, can attain. REITs give them exposure to a range of assets, like offices, hotels, and retail space, across a wide swath of geographies.

Here are three highly rated funds for investors looking for opportunities in this out-of-favor area.

Cohen & Steers Realty Shares CSRSX

Cohen & Steers is a behemoth in the listed real estate space. With $7.4 billion in assets, this US-focused fund is one of the largest actively managed strategies in the real estate Morningstar Category. The fund has remained flexible despite its size, using a balanced mix of macroeconomic inputs and bottom-up, company-level analysis. For example, management’s research into the continued growth of data consumption helped convince it to overweight cell tower REITs in the past year. It took advantage of lower prices and added to holdings after stocks such as American Tower AMT underperformed in 2024, partly because of their interest rate sensitivity. The fund’s three-year annualized gain of 7.6% through October 2025 ranked in its group’s top quartile, and its five-, 10-, and 15-year records are similarly strong.

Janus Henderson Global Real Estate JERTX

This high-conviction fund’s portfolio holdings span multiple continents. The Europe-, Asia-, and US-based managers and analysts use region-specific screens to slim down a universe of more than 500 stocks by about 80%. The team qualitatively evaluates the remaining companies, considering each company’s management team, asset quality, and balance sheet. The resulting 50-60 stock portfolio has about half the holdings of the typical global real estate category peer. Data centers count among the fund’s top holdings, including Equinix EQIX and Digital Realty DLR, which have been buoyed by demand for artificial intelligence services. Under the current team tenure from June 2017 through October 2025, the fund’s annualized 4.9% gain outpaced the typical peer by more than 160 basis points.

Vanguard Real Estate Index VGSLX

For a more broad-based approach, this index fund offers a low-cost, passive way to exploit the market’s collective wisdom on the US-based real estate market. The fund fully replicates the MSCI US Investable Market Real Estate 25/50 Index, which is designed to capture large-, mid-, and small-cap stocks. Its holdings consist primarily of equity REITs, which own and operate income-producing real estate. Typically, less than 10% of assets are in real estate management and development firms, and the fund eschews mortgage and hybrid REITs, which derive some of their revenue from real estate lending. Low fees and diversification have produced steady results. The fund’s three-year annualized 6.8% gain through October 2025 ranked in the real estate category’s top half, and so did its 10- and 15-year returns.

This article first appeared in the October 2025 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting this website.