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Real Estate Funds Rebuilding

The Chicago Tribune analyzes the state of real estate funds, which have rebounded this year after a rough performance in 2007.

The average real estate fund is up 2 percent in this year, compared with the 8 percent decline of the average U.S. diversified stock fund, according to Lipper Inc.

Real estate funds are down 14 percent for the 12-month period that includes last year's worries over credit issues, as well as concern that real estate stocks and properties had become overvalued.

But the three-year annualized return is 6 percent and five-year annualized return 14 percent. Some experts believe real estate investment trusts should have a home in most portfolios.

"There has been quite an inflow of money into real estate funds this year because people believe the market has already priced in many of the negatives about the economy and real estate," said Barry Vinocur, editor of Realty Stock Review in Novato, Calif. "And it generally is a bullish indicator whenever you see investors putting money in."

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