2024-07-26 13:37:37 ET
Summary
- Neuberger Berman Real Estate Securities Income Fund Inc aims to provide high income from real estate securities, with a yield of 10.73%.
- The NRO closed-end fund's performance has been mixed, outperforming the real estate sector for the past year but underperforming over the past five years.
- Real estate securities prices should go up quickly when interest rates start declining, so this fund will have a tailwind at that time.
- The fund managed to cover its distribution over the past six months, which is a nice change from previous years.
- The fund is currently trading discounted, but it is well above its monthly average.
The Neuberger Berman Real Estate Securities Income Fund Inc ( NRO ) is a closed-end fund, or CEF, that aims to provide investors with a very high level of income by investing in real estate securities. This is a sector that has been something of a mixed bag for investors over the past few years. In theory, real estate should work pretty well as a hedge against inflation and the loss of purchasing power.
Kiplinger’s points out in an article earlier this year that real estate investment trusts proved to be a much better asset than stocks or bonds during the stagflation period in the 1970s. There have been rumblings in some corners of the market that we may be entering a similar period today, although as of right now, gross domestic product growth is too strong to actually call today’s economic environment a period of stagflation. Nonetheless, real estate has generally proven to be resistant to inflation and serves as a store of value. With that said, high vacancy rates in the commercial office sector coupled with the highest interest rates that we have seen in twenty years have resulted in poor returns for most real estate portfolios over the past two years. That might be at least partially due to the price of many real estate investment trust common stocks being too high in 2021, however.
The Neuberger Berman Real Estate Securities Income Fund generally does pretty well for income-focused investors who are seeking to earn some money from their portfolios. As of the time of writing, the fund yields 10.73%, which is a somewhat higher yield than that possessed by most closed-end funds today. However, due in part to the suppressed performance of the real estate sector compared to other assets, most closed-end funds that invest in this sector have very high yields right now. For example, consider the following:
Fund Name | Morningstar Classification | Current Yield |
Neuberger Berman Real Estate Securities Income Fund | Equity-Real Estate | 10.73% |
Cohen & Steers Real Estate Opportunities & Income Fund ( RLTY ) | Equity-Real Estate | 8.61% |
Nuveen Real Estate Income Fund ( JRS ) | Equity-Real Estate | 8.22% |
Principal Real Estate Income Fund ( PGZ ) | Equity-Real Estate | 12.00% |
abrdn Global Premier Properties ( AWP ) | Equity-Real Estate | 11.82% |
CBRE Global Real Estate Income Fund ( IGR ) | Equity-Real Estate | 13.00% |
Read the full article on Seeking Alpha
For further details see:
NRO: This Real Estate Fund Might Have Some Tailwinds In The Near Future