Investors hoping for a relatively smooth market ride into spring have likely been pretty disappointed with how things are playing out. Market volatility has jumped in recent weeks as turmoil in the Middle East, rising oil prices, and a natural disaster in Japan have threatened the nascent global recovery. But for investors who don't want to flee the market and risk missing out on further gains, where else can they look for attractive investing opportunities?

Show me the money
If the wealthy are any guide, there's a new hot spot in the investing world -- commercial real estate. We all know that residential housing is still in the doldrums. In fact, the latest S&P/Case-Shiller Home Price Index data show that housing prices are still falling in most major metropolitan areas. But action on the commercial side is heating up. According to research firm Real Capital Analytics, high net worth individuals invested roughly $2.1 billion in commercial real estate last year, compared to just $579 million in 2009.

Since prices in this sector have fallen approximately 42% since their peak in October 2007, according to the Moody's/REAL Commercial Property Price Index, intrepid investors are finding some real bargains. Apparently, apartments have been a hot area of interest, accounting for approximately 32% of all transactions in the sector last year.

Of course, you probably don't have millions of dollars to spend on an apartment building or two. But you can still get in on the action in this sector. While recommendations for a real estate allocation within a portfolio vary widely, I advise keeping your exposure here on the low side. Investors who are homeowners already have a very large exposure to the residential real estate market, which is important to keep in mind since the home is oftentimes one's largest asset. In general, I don't think the average investor should have much more than 5%-10% dedicated to real estate stocks or mutual funds.

Getting in the game
If you're looking to get broad exposure to commercial real estate on the cheap, exchange-traded funds are a good option. You want to make sure you pick well-diversified funds that invest in a range of sectors and types of properties, including malls, apartments, and health care. Two good, low-priced options are iShares Cohen & Steers Realty Majors (NYSE: ICF) and iShares Dow Jones US Real Estate (NYSE: IYR). The first fund comes with a low 0.35% price tag, while even the more expensive Dow Jones ETF will only put you back 0.47%, a veritable bargain compared with many pricey active mutual funds.

However, there are some actively managed real estate funds that have managed to add value above and beyond their costs. If you're a more adventurous real estate investor and are willing to stomach a lot of volatility, you might want to check out CGM Realty (CGMRX). This fund is run by investing guru Ken Heebner and currently ranks in the top 1% of all real estate funds over the most recent five-year, 10-year, and 15-year periods. Of course, recent performance has been more of a struggle, so investors really need a long-term outlook.

Heebner has some flexibility here, and even though this is a real estate fund, he moved heavily into industrial materials stocks a few years ago. This helped fund performance, but investors need to be comfortable with such a wide-ranging approach. The portfolio is also fairly concentrated, with roughly two dozen names, so there's plenty of risk here. Right now, Heebner is leaning heavily on real estate investment trusts Simon Property Group (NYSE: SPG) and SL Green Realty (NYSE: SLG). Both companies have roughly doubled the return of the S&P 500 in the past year. Risk and reward is played out big here, so squeamish investors need not apply.

Going global
If you're looking for a slightly tamer but more global approach to real estate investing, Third Avenue Real Estate Value (TVRVX) may be right up your alley. Here, manager Michael Winer scours the globe looking for properties that he can buy on the cheap and then help turn around. While U.S. companies make up the largest proportion of the fund's equity holdings at 23.3%, Hong Kong stocks clock in with an 18.7% allocation, while firms based in the U.K. account for another 15.7%. Winer recently added Hong Kong-based Cheung Kong Holdings to the portfolio, as well as smaller positions in U.S. firms Howard Hughes Corp. (NYSE: HHC) and Ryland Group (NYSE: RYL). This fund isn't the cheapest, with a 1.40% expense ratio, but it is one of the better actively managed global real estate funds around.

Ultimately, given how far real estate has been beaten down in the past few years, there are bound to be some select investing opportunities floating around out there. And if ultra-wealthy investors are putting their money on the line in this sector, the rest of us would do well to pay attention.

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