Abstract
Investors recognize the importance of asset allocation. However, one must clearly understand the characteristics of any asset class added to the portfolio. Here we examine the holdings of real estate mutual funds to examine the nature and level of property-type diversification. We find that real estate funds hold a wide array of property types in varying degrees of concentration. These factors can dramatically affect portfolio composition. The results of this research suggest investors need to exercise extreme caution when selecting a real estate mutual fund to add to their financial portfolio.