T
he BlackRock Real Estate Securities Fund achieved returns of 16.28% (Institutional) and 16.21% (Investor A) in Q3 2024, matching its benchmark. Key contributors were triple-net, life science, and lodging sectors, while self-storage, retail, and cold storage sectors hindered performance.
The fund's strategy includes overweight positions in tower, health care, and triple-net sectors, with underweight holdings in billboard, data center, and life science sectors. Despite macroeconomic and geopolitical volatility, the fund aims to identify unique stock ideas and maintain a balanced portfolio to capitalize on sector dispersion.
Top contributors included Agree Realty (ADC) and Boston Properties, while top detractors were Iron Mountain (IRM) and Public Storage. At a sector level, triple-net and underweight life science and lodging sectors performed well, while self-storage, retail, and cold storage sectors weighed on returns.
The fund's portfolio management team aims to identify unique, idiosyncratic single-stock ideas viable across various scenarios and construct a portfolio relatively insensitive to macroeconomic shifts. The dispersion across listed real estate markets and sectors will continue to present opportunities to bolster performance as the year comes to a close.
The top 10 holdings in the fund include American Tower Corporation (AMT), Equinix (EQIX), Prologis (PLD), and AvalonBay Communities (AVB). The Morningstar Overall rating for Institutional shares is 4 stars, based on risk-adjusted total return against 229 Real Estate Funds.
The fund's investment approach involves investing at least 80% in equity investments engaged primarily in real estate industries inside the United States. Important risks include stock values fluctuating in price, investing in small- and mid-cap companies, non-diversification of investments, concentrating investments in single sectors, and using derivatives to hedge investments or seek to enhance returns.
The fund's expenses for Institutional shares are 1.10%, while Investor A shares have a total expense ratio of 1.24%. The contractual waivers with an end date of June 30, 2025 may be terminated upon 90 days' notice.
