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What is a Real Estate Mutual Fund Trust?
"Real estate mutual fund trusts offer exposure to a diversified portfolio of real estate assets with professional management, making them an attractive option for individual investors."
Cynthia Aasen | Registered Dealing Representative
A real estate fund trust is a type of investment vehicle that pools money from multiple investors to acquire and manage one or more real estate properties. The properties can include residential, commercial, industrial, and other types of properties, and the trust is managed by professional real estate managers. Investors in the trust receive a share of the income and/or profit generated by the properties.
A real estate fund trust is organized as a trust and it is regulated by securities laws, which generally requires the fund to register with securities regulatory authorities, and to file regular reports on its holdings and performance. The real estate fund trust issues shares, which represent an investor’s proportionate ownership in the trust.
The investors in a real estate fund trust are considered the beneficiaries of the trust and the trust’s assets are held for their benefit. The real estate fund trust is run by a board of trustees which acts as a fiduciary and is responsible for overseeing the management of the fund, ensuring that the fund is run in the best interests of the shareholders.
The real estate fund trust pools money from multiple investors and use it to buy a diverse portfolio of assets, spreading the risk across many different investments. Mutual funds are a popular choice for individual investors, since they provide a way to gain exposure to a diversified portfolio of real estate assets, with professional management, and with a relatively low investment. Additionally, Mutual funds can come in different types, like index funds, bond funds, equity funds and others, providing a variety of options for different investors.
Like any investment, real estate mutual fund trusts carry certain risks.
Market risk: The value of the fund can be affected by changes in the real estate market, such as declining property values, rising interest rates, or changes in economic conditions.
Management risk: The performance of the fund is dependent on the skill and experience of the fund managers. If the managers make poor investment decisions, the fund can underperform.
Liquidity risk: Real estate investments are typically less liquid than other types of investments, such as stocks or bonds. This means it can be more difficult to sell your shares in the fund, especially in a declining market.
Concentration risk: If the fund has a concentrated portfolio of properties in a specific location or sector, it may be more vulnerable to economic or market conditions in that area.
Leverage risk: Some real estate mutual funds use leverage, which involves borrowing money to invest in properties. This increases the potential for higher returns, but also increases the risk of losses if the value of the properties decreases.
It’s important to consider these risks when evaluating a real estate mutual fund trust and to consider it as part of a diversified investment portfolio.
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Licensed as a professional real estate agent for 25+ years, Cynthia’s expertise is diverse – real estate syndication, development, multi-family value-add and strata ownership. Dually registered as Associate Broker with eXp Realty Canada Inc. and Dealing Representative with Integrated Equities Inc. she is able to offer investors access both public and private real estate investments in North America’s leading markets.
Cynthia and her team act as advisors helping you make informed decisions. Since 2015 they have raised over $100 million in limited partnership equity representing $400 million in real estate transactions since inception in 2015. In addition, they sold over 200 individually titled investor properties, offering “true” turn-key solution for active real estate investors – “You invest, we’ll do the rest”.
