Best Income Funds for 2014: The Fidelity Real Estate Income Fund is Turning Bullish

The chart below shows the inverse relationship between interest rates (e.g. TNX – 10-year treasury note yield) and U.S. bond investments (e.g. FBIDX – Fidelity U.S. Bond Index Fund): rising interest rates have created a bear market for bonds starting in May 2013. Since interest rates are expected to continue to rise, this trend leaves few good choices for investors who are looking for income.

fbidx

Source: FidelitySignal.com

One possible exception is high yielding corporate bonds. We highlighted the Fidelity Capital and Income Fund (FAGIX), as an excellent choice in the current market environment (see article from November 14, 2013). The chart below shows that FAGIX continues to perform well in 2014.

fagix

Buy and sell signals are available at FidelitySignal.com

Today, we’d like to highlight the Fidelity Real Estate Income Fund (FRIFX), as another choice for income investors in 2014. FRIFX is not a pure bond fund, but provides an impressive 4.82% yield. FRIFX invests in debt securities, and preferred or common stock of real estate companies. The current bond allocation is 42%, according Morningstar.

The chart below shows that the long-term bullish trend for FRIFX was interrupted during the May 2013 correction and the price (net asset value) reached a low point in August. The price pattern has turned positive again in the last four months and we would not be surprised to see FRIFX resuming its long-term bullish trend in 2014.

frifx

Buy and sell signals are available at FidelitySignal.com

 

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