This article is from the Australian Property Journal archive
FUNDS of funds invested US$5.5 billion into the global real estate market in 2022 and delivered a positive performance of 2.93%, but slowed significantly compared to 2021, which investors continue to enhance Asia Pacific strategy.
According to the ANREV / INREV Funds of Funds Study 2023, the 2022 performance was well below the 13.96% of the prior year.
Amélie Delaunay, senior director of research and professional standards at ANREV, said the fund of funds’ average return remaining positive despite global headwinds is “commendable”.
Funds of funds – relatively smaller in size compared with other traditional larger investors – have assets under management largely allocated to core strategies, however, the 10% allocation to value-add investments for funds of funds is the highest allocation on record.
At 11% of the total capital managed by European domiciled funds of funds’ allocation to vehicles with Asia Pacific strategy, the increase in the allocations to the region has more than doubled over the last three years.
“This is reflective of the Asia Pacific region’s growth in sophistication and investment opportunities, as well as, in some parts, dislocation from the global economic and interest rate cycles,” ANREV/INREV said.
Industrial and logistics account for 28% of funds of funds’ portfolios at the end of 2022, a notable increase from 22% at the end of 2021.
“This showcases the funds of funds’ ability to shift the dynamics of their portfolios to changes in sector outlooks relatively quickly by the non-listed real estate standards.”
Delaunay said it “noteworthy” that the investment opportunities in the Asia Pacific region offer diversification potential to fund managers in the face of market challenges.
“It is also interesting to observe funds of funds exuding nimbleness in portfolio dynamic shifts in reaction to market changes in sector outlooks, and supplementing returns with more allocations to value-add style investing.”
