Asia Pacific posts remarkable returns
The share of total capital raised for non-listed real estate funds of funds doubled in 2017, with the Asia Pacific staging a “remarkable comeback”, according to the latest study from ANREV.
The latest ANREV / INREV Funds of Funds study, published by the Asian and European associations for investors in non-listed real estate vehicles, found AUD$215.6 billion of fresh equity was raised for non-listed real estate in 2017.
Of that, US$11.4 billion, or 5.2 per cent, was destined for funds of funds.
A fund of funds – often referred to as a multi-manager investment – is an investment strategy in which a fund invests in other types of funds.
This record level of new capital for funds of funds represents a significant jump on the US$4.3 billion, or 2.5 per cent, of total capital raised in 2016.
Funds of funds delivered positive investment returns across different styles, structures, regional strategies and size. One in seven investors plan to increase their allocations to funds of funds over the coming two years. The sector achieved an annual return of 5.1 per cent over 2017, slightly down on the 6.2 per cent achieved the year prior.
Funds of funds with a global strategy comprise the largest share of vehicles, both by number and size. Global strategy vehicles make up just under per cent of the overall vehicles and represent 78.6 per cent of total net asset value.
Vehicles with a European strategy represented 33 per cent, while those targeting Asia Pacific represent 20 per cent. Strategies targeting North America were minimal.
All regional strategies delivered positive returns, but those targeting Asia Pacific especially so.
After a few years of subdued performance, Asia Pacific funds of funds posted a remarkable comeback with returns of 15.1 per cent in 2017, a strong comeback from the -3.3 per cent recorded in 2016.
In comparison, European and global funds generated 6.6 per cent and 4.4 per cent respectively, a similar performance to last year.
“The scale of the returns in Asia Pacific in 2017 are significant, demonstrating their increasing appeal in the region,” says Amélie Delaunay, ANREV’s director of research and professional standards.
“The results generally reflect good health within the funds of funds segment, showing that they continue to offer smaller investors in particular an important diversification tool and the opportunity to create a nice blend of different funds.”