At last, LPTs score ‘low risk’ profile
Listed Property Trusts (LPTs) have achieved a lower risk profile with good returns during the past 18 years, according to the latest research released by Australian Unity.
LPTs during that period gave an average return of 14 per cent. The number of times during the 18 year period the index gave a negative return was 8 per cent.
This compared to international equities with an average return of 18 per cent, however, the risk on returns was 15 per cent during that 18 year period.
Australian equities gave an average return of 17 per cent with a risk factor of 20 per cent.
Australian Unity general manager financial services Craig Dunstan says the research showed that the benefits of including LPTs in a portfolio was a reduction in volatility.
"The inclusion of LPTs within a portfolio is a reasonable trade-off for portfolios designed for growth and capital stability," he says.
According to the Australian Unity research, property security funds (psf) are giving the best returns on a longer time horizon. On three years, the friendly society's psf growth units gave a return of 16 per cent compared to 14 per cent by the LPT index.
Managers like Westpac, Colonial First State and HSBC all achieved returns that matched LPTs with their psfs.
However, on six month performance almost all psfs, including Australian Unity's unit trust, gave negative returns - which matched the -3 per cent of the LPTs.
Dunstan says the stronger long-term returns has supported the friendly's approach of holding a wide array of LPTs which protects the investor from poor-performing years during the economic cycle.
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