26. Juli 2010 
Print
Print
Specialist funds outperform direct market by almost 500 bps
UK pooled property funds have delivered 22.9% annual total return over the 12 months to the end of the second quarter, as measured by the IPD UK Pooled Property Fund Indices (PPFI). This compares with a 23.9% return on direct markets.
The indirect fund performance represents the second-highest rolling annual return to June in the last 10 years, behind the 24.7% delivered over the 12 months to Q2 2006 – at the height of the property bull market. Over the 12 months to June, specialist funds, which adopt esoteric strategies and apply higher levels of leverage, delivered 28.8%, outperforming the direct market by almost 500 basis points, while balanced funds returned almost 10 percentage points lower that specialist funds, at 19.0%.
“Specialist funds have comfortably outperformed the main market over the last 12 months, driven by successfully-applied focused strategies as well as by the positive impact leverage can have in rising markets,” explains Cameron McVean, Head of Fund Indices at IPD.
The IPD UK PPFI – sponsored by The Association of Real Estate Funds (AREF) and Linklaters – is comprised of 26 balanced and 34 Specialist quarterly-valued funds, with a combined net asset value of £25.3bn at June 2010. Pooled property funds have recovered substantially since the -48.8% lost over the preceding two years, with the PPFI showing funds are almost back to October 2008 levels.
Q2 performance and 12-month asset class comparison
Over the second quarter, balanced and specialist funds delivered 3.1% and 4.0%, respectively. Across the 60-strong fund constituents, all but two funds delivered a positive return for the quarter ranging from -3.9% to 10.7%.
Compared to other asset classes, in the 12 month rebound in pooled property fund performance, UK PPFI funds outperformed domestic REITS, equities and gilts, which returned 19.2%, 21.1% and 7.0%, respectively.
The indirect fund performance represents the second-highest rolling annual return to June in the last 10 years, behind the 24.7% delivered over the 12 months to Q2 2006 – at the height of the property bull market. Over the 12 months to June, specialist funds, which adopt esoteric strategies and apply higher levels of leverage, delivered 28.8%, outperforming the direct market by almost 500 basis points, while balanced funds returned almost 10 percentage points lower that specialist funds, at 19.0%.
“Specialist funds have comfortably outperformed the main market over the last 12 months, driven by successfully-applied focused strategies as well as by the positive impact leverage can have in rising markets,” explains Cameron McVean, Head of Fund Indices at IPD.
The IPD UK PPFI – sponsored by The Association of Real Estate Funds (AREF) and Linklaters – is comprised of 26 balanced and 34 Specialist quarterly-valued funds, with a combined net asset value of £25.3bn at June 2010. Pooled property funds have recovered substantially since the -48.8% lost over the preceding two years, with the PPFI showing funds are almost back to October 2008 levels.
Q2 performance and 12-month asset class comparison
Over the second quarter, balanced and specialist funds delivered 3.1% and 4.0%, respectively. Across the 60-strong fund constituents, all but two funds delivered a positive return for the quarter ranging from -3.9% to 10.7%.
Compared to other asset classes, in the 12 month rebound in pooled property fund performance, UK PPFI funds outperformed domestic REITS, equities and gilts, which returned 19.2%, 21.1% and 7.0%, respectively.
