18. September 2012 
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IPD Italian property funds deliver the second consecutive negative performance
The IPD Italy Biannual Property Fund Index published today recorded a total return of -2.3% in the six months to June 2012, which is the second consecutive negative performance, bringing the annual figure to -4.8%. Although the headline numbers show a slight improvement against the year end results of +30 bps, the Index reported a negative difference of 350 bps compared to the same period last year.
The Index sample has remained unchanged as far as the number of funds is concerned at 39 closed-ended domestic funds, accounting for a total NAV of just below € 8 billion, and a total AUM of € 13.4 billion. These both show a contraction against the previous semester of 4.8% and 3.6% respectively. The number of institutional funds has increased to 17 funds with the inclusion of M DUE, whilst the retail fund Caravaggio has been dropped out of the sample following recent changes in the funds’ governance.
Drilling down into the sub-indices and considering the funds property asset allocation, specialist funds were the worst performers with a six month return of 2.8% (-2.1% in the second half of 2011). Balanced funds on the other hand delivered -1.3%, the best result in this issue of the Index. The sample is also split by investor type, with retail and institutional funds returning -2.0% and -2.6% respectively. By fund type, blind pools achieved a total return of -1.7%, and seeded funds of -2.6%. No category was spared by the plunge in returns, although an inversion of trends seems to have occurred between institutional/seeded/specialist funds, which are historically stronger. Retail/blind pool/balanced funds show poorer performances for most of the Index series.
Italian funds negative returns compare to similar declining trends in most alternative investment options; equities delivered a -2.4% in the first half of 2012 (although the yearly performance was -26.1%), and real estate stocks returned -1.0% (-57.9% June to June). Italian government bonds were the only asset class to fare in positive territory with a strong 10.4% total return. On the whole, the negative performance of the Italian Property Fund Index lies in its capital (NAV growth) component, which drove the overall return with a -3.1% decline, only partly compensated by the distributions component (+0.8%).
Giancarlo Cucini, Senior Analyst at IPD comments: “The results of the Index confirm the trends of the financial markets and the difficult economic and financial context Italy and Europe have been facing for the past few years. We have isolated two main trends in the domestic property funds market, which highlight how Italian fund managers are tackling the situation; firstly most of the funds are undergoing a marked de-leveraging process. Although the debt component has not decreased much as a percentage of the funds GAV, the total debt has shrunk by € 100 million and two funds in the sample are now un-geared. For blind pools and balanced funds, in particular the loan-to-value ratio has decreased by 11% and 9% respectively in the last 6 months. Secondly, there is evidence of some re-pricing as a number of funds prepare for the wind-up phase.”
The Italian Property Fund Index universe consists of 39 funds with a combined net asset value of €7.9 billion. IPD thanks Assogestioni and Deloitte, sponsors of the Index, and all fund constituents for the support provided in the development of this publication.
The Index sample has remained unchanged as far as the number of funds is concerned at 39 closed-ended domestic funds, accounting for a total NAV of just below € 8 billion, and a total AUM of € 13.4 billion. These both show a contraction against the previous semester of 4.8% and 3.6% respectively. The number of institutional funds has increased to 17 funds with the inclusion of M DUE, whilst the retail fund Caravaggio has been dropped out of the sample following recent changes in the funds’ governance.
Drilling down into the sub-indices and considering the funds property asset allocation, specialist funds were the worst performers with a six month return of 2.8% (-2.1% in the second half of 2011). Balanced funds on the other hand delivered -1.3%, the best result in this issue of the Index. The sample is also split by investor type, with retail and institutional funds returning -2.0% and -2.6% respectively. By fund type, blind pools achieved a total return of -1.7%, and seeded funds of -2.6%. No category was spared by the plunge in returns, although an inversion of trends seems to have occurred between institutional/seeded/specialist funds, which are historically stronger. Retail/blind pool/balanced funds show poorer performances for most of the Index series.
Italian funds negative returns compare to similar declining trends in most alternative investment options; equities delivered a -2.4% in the first half of 2012 (although the yearly performance was -26.1%), and real estate stocks returned -1.0% (-57.9% June to June). Italian government bonds were the only asset class to fare in positive territory with a strong 10.4% total return. On the whole, the negative performance of the Italian Property Fund Index lies in its capital (NAV growth) component, which drove the overall return with a -3.1% decline, only partly compensated by the distributions component (+0.8%).
Giancarlo Cucini, Senior Analyst at IPD comments: “The results of the Index confirm the trends of the financial markets and the difficult economic and financial context Italy and Europe have been facing for the past few years. We have isolated two main trends in the domestic property funds market, which highlight how Italian fund managers are tackling the situation; firstly most of the funds are undergoing a marked de-leveraging process. Although the debt component has not decreased much as a percentage of the funds GAV, the total debt has shrunk by € 100 million and two funds in the sample are now un-geared. For blind pools and balanced funds, in particular the loan-to-value ratio has decreased by 11% and 9% respectively in the last 6 months. Secondly, there is evidence of some re-pricing as a number of funds prepare for the wind-up phase.”
The Italian Property Fund Index universe consists of 39 funds with a combined net asset value of €7.9 billion. IPD thanks Assogestioni and Deloitte, sponsors of the Index, and all fund constituents for the support provided in the development of this publication.
