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A Cautious, Consistent Real Estate Strategy

Silver-rated Morgan Stanley US Real Estate may trail peers when risky real estate bets are in vogue, but we expect it to perform well over the long haul.


David Kathman: Morgan Stanley US Real Estate is one of the better funds in Morningstar's real estate category for a number of reasons. The lead manager, Ted Bigman, has been around since the fund was launched in 1995, so he has a lot of experience. And he's used a consistent strategy that whole time, where he owns REITs, and some non-REIT real estate stocks that are trading below the net asset value of their underlying properties. That's a fairly cautious approach and it means that the fund will tend to trail its peers when expensive, riskier REITs are doing well, which is what has happened over the past year. But over the long term its returns are excellent, and it's been consistently good, seldom trailing the category by very much or for very long. All that, plus a pretty reasonable price tag, adds up to a Morningstar Analyst Rating of Silver, meaning we're confident that this fund can continue to do well in the future.

David Kathman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.