Non-listed real estate FoFs see leap in performance

Office buildings1Funds of funds that invest in non-listed real estate – and returned a disappointing 0.2% two years ago - have moved back to “prominence as a key area of interest for institutional investors”, it is claimed, after the sector made a total return of 8% last year.

Analysis by industry trade groups of performance show that the fund of funds sector that invests in non-listed real estate has also closed the gap between upper and lower quartile performers, to 11.9% last year, from 21.5% in 2008.

“The data from the recent study signals a strong recovery of the funds of funds industry, moving it backto prominence as a key area of interest for institutional investors, following much poorer performancesover the previous eight years,” say Inrev and Anrev, the trade bodies that have produce the Funds of Funds Study 2015.

Global funds of funds delivered the highest returns for 2014 at 11.9%. Returns for funds of funds targeting non-European markets rose to 9.8%, the highest since 2011.

Those with a European strategy “rose significantly”, recording a total performance of 5.2% – a huge jump from the 5.1% loss in 2013.

Funds of funds focused on the Asia Pacific region trailed other regions, with losses at 3.3% in 2014.

Catriona Allen, fund manager at Aviva Investors’ global real estate fund of funds unit, says: “Global funds of funds have a wider universe of potential funds to invest in, giving greater opportunities to select managers they perceive to be the best in their class, and so able to deliver superior returns. They are also able to access sectors and regions at different points of the investment cycle, avoiding potential downturns in one region in favour of other preferred opportunities.”

Closed-ended funds of funds outperformed their open-ended counterparts with total returns of 8.9% and 7.8%, respectively, continuing a trend since 2009.

The Funds of Funds Study 2015 includes data from 64 funds of funds managed by 25 managers with €9.5 billion of net asset value.

Inrev is the European Association for Investors in Non-listed Real Estate Vehicles and is based in Amsterdam. Anrev is its Asian sister organisation.

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