Real estate funds just clocked their best week of inflows ever

Real estate agents arrive at a brokers tour showing a house for sale in San Rafael, California.
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Real estate agents arrive at a brokers tour showing a house for sale in San Rafael, California.

Global real estate funds have seen their biggest week of inflows on record, according to new research, with U.S.-based funds taking the lion's share.

Equity and bond funds saw outflows for the week ending September 14, according to data from fund tracker firm EPFR Global on Thursday evening. But that cash found a home with real estate funds which posted a record setting inflow of nearly $3 billion.

"It is not clear at this point if these flows represent investors taking advantage of a cheaper entry point to jump into a sector with a good record of producing income, are another sign that mutual fund investors don't expect the (Federal Reserve) to raise rates this year, are the result of real estate's separation from financials in the S&P 500 or show investors building up short interest in a sector that some see as coming off the peak of the latest cycle," said Cameron Brandt, research director at EPFR Global, in a statement.


EPFR Global tracks over 65,000 traditional and alternative funds with $24.5 trillion in total assets under management. It said that more than 90 percent of the week's headline number for real estate actually went to a single U.S.-based exchange-traded fund (ETF). It added that another 16 real estate sector funds took in over $10 million during the week and over 50 percent of the funds tracked recorded positive or neutral flows.

"Behind the large shadow cast by U.S. real estate funds those with Japan mandates extended a rebound in flows that started in mid-May while flows for U.K. real estate sector funds remain frozen after the post-Brexit gating of some of those funds were forced to implement."

As of the close of trading last Friday, the real estate industry became its own sector in the S&P 500, bringing the broad market index up to 11 divisions. The move primarily affected real estate investment trusts (REITs), moving 28 issues with nearly $600 billion in market cap out of the financial sector and into the new real estate heading. The inflows into real estate funds could therefore be investors looking to balance their portfolios, EPFR Global reports.

—CNBC's Jeff Cox contributed to this report.