One of Narula's funds, the Metacapital Mortgage Opportunities Fund, which invests primarily in residential and commercial mortgages, was up 41.25% last year, with $1.46 billion in assets as of Jan. 1.
One of the reasons real estate offers such great opportunities, Narula said, is because there are relatively few investors in large market.
"There are structural inefficiencies that have occurred in the mortgage market that the managers have been able to take advantage of," he said.
As a result, Narula believes equity funds simply can't match the yields in more inefficient markets such as mortgages.
"Even if you were fortunate enough to absolutely nail the bottom of the stock market in 2008, you would have doubled your money," he said. "Mortgage managers have done a lot better than that."
Narula said much of this opportunity has been created by the Federal Reserve, which is buying $40 billion in mortgage bonds each month as part of its quantitative easing.
Narula has been more optimistic on housing than other investors over the past few years. "And it has played out," he said. "Home prices have momentum, so we think that housing is in pretty good shape here."