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DENVER-Invesco Funds’ Real Estate Opportunity Fund returned 11.05% in the year ending on March 31, shows the Denver-based family of mutual funds’ latest report. Only three of Invesco’s 24 funds performed better in that time period.

Two of them were energy funds, which returned 23.09% and 22.35%, respectively, and the third was a financial services fund that returned 11.25%.

In his letter to shareholders, fund manager Sean D. Katof, notes he outperformed the S&P 500, which lost 21.67%, but the fund did not keep pace with the NAREIT-Equity REIT Index, which surged 23.88%.

Real estate investment trust accounts for 72.72% of the assets of the Real Estate Opportunity Fund.

Top holdings include AMB Property, Equity Office Properties Trust, Arden Realty, Cousin Properties and First Industrial Realty Trust.

Katof says that given the near-term uncertainty in the equity market, he has adopted a more defensive investment strategy. That includes taking profits on some select positions, especially office REITs. Office REITs may be sensitive to slowing business activity, he said.

”Given the risk of continued equity market volatility, we believe that investors will continue to seek out the REIT market as an investment haven,” Katof says. ”Many (REITs are) now trading at attractive valuations that provide a firm foundation for future gains, and we anticipate that investors will again reward those investments once economic uncertainty dissipates.”

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