The managers of Phocas Real Estate buy property companies that should do well even in a declining market. Thinkstock By Miriam Cross, Associate Editor From Kiplinger's Personal Finance, June 2015 Investing in real estate can be rewarding, and you don’t need to own a shopping mall or an office complex to reap the benefits. Property-owning entities called real estate investment trusts—which trade like stocks and pay steady dividends—crushed the broad stock market over the past 12 months, and the average real estate mutual fund returned 22.5% over the period.See Also: How to Earn Up to 8% Yield From Dividend Stocks Phocas Real Estate, a fund that invests in REITs, did even better, earning 28.0%. Phocas focuses on attractively valued, high-quality REITs that its managers believe will produce steadily growing cash flow and prove resilient even in a declining real estate market. A disciplined executive team is important, as are the locations of properties that a REIT owns: New York City offices, for example, will always be in demand, compared with, say, offices in the suburbs. “We’re very risk-averse,” says comanager James Murray, who likens his approach to hitting singles and doubles instead of swinging hard and risking a strikeout. “If I don’t get any home runs, I’m okay with that.” Phocas is tiny, with just $12 million in assets. Among its 29 holdings are REITs that focus on offices, apartments and hotels. So far, the fund’s strategy has generally produced solid results. In its first nine years of existence (including so far in 2015), Phocas has landed in the top third of the real estate fund category six times. One caveat: Annual expenses run a steep 1.50%. *Annualized for three and five years. @Rankings exclude share classes of this fund with different free structures or higher minimum initial investments. **Closed to new investors. Sources: Morningstar Inc., Vanguard.