Seven-and-a-half years ago, investors were shell-shocked when their real estate investment funds came crashing down along with the rest of their multi–asset class portfolios. The conventional wisdom that real estate would be a diversifier in volatile times proved false, especially for highly leveraged funds closely tied to the financial markets. For several years afterward, investors were wary of re-entering the fund world. Conferences often featured panel discussions on whether the fund model was dying. But, to paraphrase Mark Twain, reports of its death have been greatly exaggerated.

Fund managers have closed on increasingly more capital each year for the past three years. In contrast, the number of new fund offerings has fallen in each of those same years.

According to Institutional Real Estate, Inc.’s FundTracker database, 656 closed-end funds have launched in the past three years, with a total equity fundraising target of $358 billion. (Not all funds listed a