NEW YORK, April 6, 2015 /CNW/ - To help investors access exposure to companies in the real estate industry, First Investors recently introduced a new mutual fund focused on companies in the real estate industry. The First Investors Real Estate Fund invests in Real Estate Investment Trusts (REITs) — companies that own, manage or finance income-producing real estate.
Investing in commercial real estate can offer investors many benefits: It produces an income stream and can help diversify a portfolio because it traditionally has a low correlation to stocks and bonds. In recent years, many commercial real estate investments have seen solid returns thanks to the U.S. economic recovery. However, direct investments in commercial real estate can be difficult to manage for a retail investor.
During the past decade, mutual funds comprised of REITs have become popular as a way for the retail investor to gain exposure to companies in the real estate industry. The new Fund will invest in approximately 85 to 100 publicly traded U.S. REITs across a wide range of property types, such as hotels, retail, office buildings, industrial properties and apartment complexes, and different U.S. regions. It will focus on identifying those REITs with a low valuation relative to their peers, along with strong cash flows and balance sheets.
Vincent Kwong, a REIT analyst and portfolio manager who has been with Foresters – First Investors' parent – since 2007, will manage the new fund. His approach is to generally use a "bottom-up" security selection approach that entails performing fundamental analyses to identify REIT securities with high, consistent return on invested capital, recurring operating income and strong capital structure.
"REITs are in all different property types and geographies, so it is incredibly important that you have expertise if you're really going to take advantage of the opportunities in this space," says Kwong, adding: "Over the past 10 years, the asset capitalization of the REIT market has gone up substantially. To keep on top of those changes, you need a dedicated team."
"REITs are often less subject to interest rate sensitivity, which could be a big plus in the current environment of expected rising interest rates," says Brian Watts, Director of Research and Strategy for FIMCO. U.S. REITs also must pay out at least 90% of their taxable income as dividends to investors, producing an income stream.
"Our team's research will seek to identify high-quality REITs in geographic areas of the U.S. with the best opportunities," Watts says.
We recommend that the First Investors Real Estate Fund be used as a satellite (non-core) holding in a multi-asset portfolio. The Fund may be appropriate for investors who: Want total return (dividend income and long-term capital appreciation); Want exposure to the real estate industry; Are willing to accept a high degree of investment risk; Have a long-term investment time horizon and are able to ride out market cycles.
The principal risks of investing in the Fund are: Industry Concentration Risk; Interest Rate Risk; Liquidity Risk; Market Risk; Mid-Size and Small-Size Issuers Risk; Non-Diversification Risk; Prepayment and Extension Risk; Real Estate Investments Risk; REIT Risk; Security Selection Risk.
For more information about the First Investors Real Estate Fund, or any other First Investors mutual fund, you may obtain a free prospectus or summary prospectus by contacting your Representative, writing to the address below, calling (800) 423-4026 or visiting our website at www.firstinvestors.com. You should consider the investment objectives, risks, charges and expenses carefully before investing. The prospectus and summary prospectus contain this and other information and should be read carefully before you invest or send money. An investment in a mutual fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
All investments involve risk, including possible loss of principal. You can lose money by investing in the Fund. Past performance is no guarantee of future results.
About First Investors
First Investors is a diversified financial services company helping everyday families reach their financial goals, offering solutions such as investment products and life insurance, as well as strategies spanning saving, investing, education funding and retirement. First Investors Corporation and First Investors Life Insurance Company are subsidiaries of First Investors Consolidated Corporation. All securities products are offered through First Investors Corporation. To learn more about First Investors please visit us at: www.firstinvestors.com
For 140 years, Foresters™, an international financial services provider, has fulfilled its purpose to enhance family well-being for its members and the communities where they live. A fraternal benefit society, Foresters offers quality life insurance and investment products, unique member benefits and inspiring community activities. Foresters shares its financial strength with more than one million members in Canada, the United States and the United Kingdom. Foresters has assets of $10.5 billion, total funds under management of $25 billion and a surplus of $1.7 billion (all figures in Canadian dollars as of December 31, 2013) and maintains an "A" (Excellent) rating by A.M. Best1. Foresters subsidiary Foresters Life Insurance Company's rating is "A-" and First Investors Life Insurance Company, also a Foresters subsidiary, received an "A-" rating. For more information, visit foresters.com.
Foresters™ is the trade name and a trademark of The Independent Order of Foresters, a fraternal benefit society, 789 Don Mills Road, Toronto, Canada M3C 1T9; its subsidiaries are licensed to use this mark.
1 An "A" (Excellent) rating is assigned to companies that have a strong ability to meet their ongoing obligations to policyholders and have, on balance, excellent balance sheet strength, operating performance and business profile when compared to the standards established by A.M. Best Company. A.M. Best assigns ratings from A++ to F, A++ and A+ being superior ratings and A and A- being excellent ratings. In assigning the ratings for The Independent Order of Foresters (Foresters) and its subsidiaries Foresters Life Insurance Company and First Investors Life Insurance Company on July 2, 2014, A.M. Best stated that the outlook for all ratings is "stable", which means they are unlikely to change in the near future. See ambest.com for the latest ratings.
SOURCE First Investors Corporation
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