Deepak Narula, who runs a group of real estate hedge funds, told CNBC Thursday that mortgage-related assets provide the best value right now.
"The mortgage hedge fund group has posted very good performance," Narula, who runs New York based Metacapital Management, said on Squawk on the Street. On average, he said, this type of fund was up over 20% last year—"and it's not the first year."
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."