AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.
I have noticed that Third Avenue Real Estate Fund (Tarex) is now doing quite well. Please explain how this is so, given the poor state of the real estate industry.
Thank you
Answer Dear Robert:
I notice that most of the real estate funds are now doing well, including Vanguard's REIT index.
The stock market is supposedly six months ahead of the news--ie, shrewd investors start buying when they figure out what's in store--"buy on the rumor, sell on the news"--and real estate has been showing signs of life lately--in fact, Third Avenue Real Estate Value, which I've owned for many years, isn't doing much better than other real-estate funds.
But it does have an advantage. It doesn't just buy REITs. It buys real estate companies, too. And it may buy debt as well as real estate stock. So it has more options than REIT funds.
Also, it buys Asian stocks--it has a man visiting Asia. And the fund claims, in its shareholder report, that it has a more long-term outlook than other similar funds.
Still, the fund recently increased its cash component, and warns that bad times may lie ahead for most REITs.
I once asked the manager of TAREX, Michael Winer, how he was able to beat a REIT index fund. His answer: An index fund must buy even bad companies.
