Which investment is similar to a mutual fund and offers tax advantages?

A real estate investment trust (REIT) is an investment that is similar to a mutual fund and offers specific tax advantages. Like mutual funds, REITs pool money from multiple investors to purchase and manage income-producing real estate properties, which can include commercial buildings, apartment complexes, and more.

One of the key tax benefits of investing in a REIT is that they are generally required to distribute at least 90% of their taxable income back to shareholders in the form of dividends. This requirement allows investors to receive income on a regular basis while benefiting from the potential for capital appreciation as the properties owned by the REIT increase in value.

Additionally, REITs provide diversification across a range of properties and geographic locations, much like a mutual fund diversifies across various stocks or bonds. This helps to reduce the risk associated with investing in real estate directly, as an investor in a REIT is not tied to the performance of a single property.

The options that do not fit the criteria of being similar to a mutual fund with tax advantages lack the same structure or benefits. Limited partnerships can have different tax treatments but are not structured like a mutual fund, while capital gains refer to the profit from the sale of assets and do not represent an