|Calmness most of the time...|
During the last market uptrend from the summer of 2003 through the end of 2007, CGMRx had a -19% price drop along the way, nearly matching a CGMFx worst of -20%. That means the 2 funds carry the same potential for heartburn (maximum adverse excursion) even if the day-to-day price movement differs (e.g., standard deviation). So FWIW, I was probably wrong to give "calmness" as an argument for CGMRx.
The CGMR charter says KH can invest 20% in anything he pleases (more if he gives notice of adverse conditions) but no short-selling allowed. The 80% in "real estate related" includes areas such as mining, fertilizer, materials of all kinds, international real estate, and companies whose business is 50% not real estate.
Recently the CGMRx and CGMFx portfolios have been about 70% different, so it seems like owning both would add overall diversification as long as the 2 funds deliver similar returns during market uptrends. But I take your point that KH is far more constrained in CGMRx than in CGMFx, and if commodities and real estate remain in a worldwide slump his choices for CGMRx are more limited.
Since Ken Heebner does run both funds, I wonder how much coordination is involved between the two. Obviously he does all his shorting in CGMFx. But does he pursue ideas in CGMRx whenever possible and do the rest in CGMFx? Both funds have done relatively well over the past 10+ years. How can that be, given the vagaries of the real estate market, unless he's been treating the two as one conjoined fund? Even if so, I take it you think that strategy has "run out of real estate". (<g>)