Is there any mutual fund which invests on real estate?

Yes, there are many real estate mutual funds. Usually they invest in real estate investment trusts (REITs), which are companies that own and manage properties.

There are many great things about these funds. First, you get diversification that you can not get by owning properties outright. These funds are diversified by types of properties (office buildings, shopping malls, apartment complexes, even prisons!), and also by geography (all different regions of the U.S., and some even have international exposure).

Another good reason to add a real estate fund to your portfolio is that these funds have a low correlation to the stock market--when stocks are down, these funds can go up, and vice-versa.

One final thing to note is that these funds generate pretty healthy dividends, so you may want to keep your real estate fund(s) in a retirement plan such as an IRA or 401(k), to minimize tax implications.

Good luck!

There are hundreds of ways to get equity exposure to real estate, including mutual funds, index funds, and exchange traded funds. I'd recommend starting at www.morningstar.com if you are most interested in open-ended mutual funds. At morningstar.com, you can search for information on funds by asset class, and then you can research the real estate funds.

Morningstar provides a ranking on a scale of five for most funds - 1 star is poor while 5 stars is strong. Remember to consider the expense ratio and management fees that each fund charges when comparing funds. Morningstar will also provide the annual returns of these real estate funds, so you can see which have outperformed their benchmarks over the 1-, 3-, and 5-year periods.

Almost every mutual fund company I can think of (Fidelity, Vanguard, Franklin Templeton) offer many different real estate funds, so you'll need to match your tolerance for risk with the different funds they offer. Good luck on your search!