In Italy the criteria for selecting real estate investments are subjects of discussion between practitioners and academics, also because the Italian real estate funds have grown considerably in recent years in terms of both asset under management size and of number of funds. The aim of paper is to investigate the investment policies and composition choices of Italian retail funds portfolio, looking at the impact on funds performance measured through the Sharpe ratio, widely used in real estate literature. In literature there are a large number of studies that deal with portfolio composition choices and how these have an impact on real estate funds performance (Morri and Erbanni 2008, Baum and Steffan 2009), measured with several Risk adjusted performance indicators such as Sharpe ratio, Treynor ratio, etc. ( Plantinga and de Groot 2001, Scholz and Wilkens 2005, Bacon, 2010 ). The theme of real estate vehicles performance has been widely dealt with at European level (Otten and Bams 2002, Grau-Carles et al. 2009, Giannotti and Mattarocci 2010, Lee and Morri 2009). This paper collocates in these studies, in particular it has drawn on from this latter, since it takes into account the main components of the investment (properties), but differs with reference to the existing literature in considering only patrimonial aspect related to funds investment policies, and the residual investment, trying to prove whether this may affect the fundís performance examined. By using a data set with annual and half-yearly data provided by ìReport of Scenari Immobiliariî, it has been examined a sample of 19 Italian retail funds over the period 2006-2009. The trend of the estimated coefficients has been studied using a multiple cross-section analysis in order to verify whether the weight of several variables changed over time. It has been possible to extract useful information about the relationships between real estate portfolio composition choices and Italian retail funds performance. Indeed, analyzing the geographical and sectorial portfolio composition, the Italian funds tend to the specialization and not to the diversification, mainly investing in properties with target use in office and retail which are located in Northwest and Central areas rather than in the South and in the Islands. The study on the portfolio composition choices has been completed with the analysis of liquidity and bonds that appear to have a lower incidence in the investment policies of the retail funds and then on their performance.