State Street Bank and Trust Co.'s institutional money management arm is introducing a real estate investment fund aimed at large-dollar investors.

The trust fund will invest in so-called Real Estate Investment Trusts, or REITs, which are publicly traded companies that buy and manage real estate..

The market capitalization of REITs tripled in the three years ending in 1993, to $37 billion, according to State Street Global Advisors, the money management unit.

The REITs have become an increasingly popular alternative to bank loans and private investment for real estate development.

The new REIT fund, which pension funds and other institutional investors will be able to join at the end of each month, will buy a pool of REITs that reflects the National Association of REIT Index,.

Robert E. Kilroy, a Global Advisors senior vice president in charge of real estate investing, said he expects the fund to attract $100 million from investors within a year.

He said REITS will be popular because their fundamentals are sound, and they have been outperforming the S&P 500 Index since 1990.

Global Advisors currently manages just under $900 million of real estate investments for its clients, Mr. Kilroy said.

The unit has more than $140 billion of assets under management overall.

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