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Ray Adderley

Measuring up global property fund performance

​The results of the third consultative release of the IPD Global Quarterly Property Fund Index (“GPFI”) were released earlier this month. Ray Adderley (Head of Investment Management Property) explains what the index is and how it may be useful for global real estate investment managers.

​The results of the third consultative release of the IPD Global Quarterly Property Fund Index (“GPFI”) were released earlier this month. Launched earlier this year, the GPFI is a new initiative that measures the performance of ‘investible’ open-ended core unlisted direct property funds across the main regional markets at the fund and property portfolio level. This is a natural step following the growth in country-specific and regional property fund indices in recent years.

This index is the aggregate of the performance that is reported by the constituent funds. Investors who may wish to implement a cross-region or global investment strategy may well experience different levels of return due to factors including feeder-fund routings, the impact of bid-offer spreads (or equivalent) and/or taxation. Currency may also be a factor for cross-border investors where investment into these unlisted pooled property funds is not hedged.

Whether or not fund managers and investors may in time adopt this, or any other global fund index, as a basis on which to define and agree future benchmarks will be particular to individual circumstances. It is reasonable to anticipate that Third-Party Multi-Manager / Fund of Funds who are implementing for their Clients a global investment strategy using unlisted funds may well consider doing so in the future.

The GPFI will remain in a Consultative Phase for the remainder of this year whilst matters relating to fund composition, data collection and reporting are finalised and fund coverage increased.

INREV/ANREV with NCREIF are also due to launch their own global fund index this October. Linking with their fund style analysis, this particular index will be a much larger since it will comprise both open and closed-ended funds and will therefore offer a broader measure of performance across the global unlisted property fund market. A key feature for IPD will be their ability to link fund level performance with their direct property market analysis and benchmarking.

There is room for both indices to co-exist for the foreseeable future, and both are welcomed as positive steps that contribute towards an improving transparency in the unlisted property fund market.

Key highlights

Headline performance

  • Reported in local currency, the GPFI delivered a 8.2% total return over the past 12 months and 10.4% pa over three years, which compares to 8.6% and 10.5% pa at the property portfolio level
  • The underlying strength of the US and Australian property markets is evident, with these markets outperforming their UK and Continental European counterparts

    Constituent funds
  • Comprises 77 funds, with a GAV and NAV of US$198bn and US$156bn respectively, with underlying property portfolio values externally valued on at least a quarterly basis
  • The regulatory and legislative framework for each domestic market tends to influence typical cash/debt levels

    Publication and next steps
  • Available around ten weeks after the quarter-end following the publication of the underlying country-specific and regional property fund indices
    Additional funds are to be included, with focus given to increasing the Continental European and Asian coverage where possible

Ray Adderley

Ray Adderley

Chief Investment Officer

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