Master trusts outperform industry funds

The tables appear to have turned for retail master trusts, with the same listed property investments that rapidly dragged them down at the beginning of the global financial crisis now leading the way as markets recover.

That is the bottom line of the latest research released by Chant West, which noted that the rebound in listed investment markets had continued in August, with the result that the median growth fund returned 3.2 per cent for the month — the sixth consecutive month in positive territory.

According to the Chant West analysis, the strong rebound in listed property had helped the retail master trusts "even the score" with the industry funds.

"While listed property has bounced back strongly, directly-held property values have continued to fall," it said.

"Since the end of February, when the 12-month return for unlisted property was more than 57 per cent higher than that of listed property, the gap has narrowed to about 11 per cent," the Chant West analysis said.

It said the striking difference in performance was largely because of the lag in revaluing unlisted property assets compared with the activity in the listed market, which, if anything, anticipated future values.

The analysis said it remained to be seen how long the valuation lag would last in the cycle and how much further unlisted property valuations had to fall.

It noted that the improvement in listed property meant that for the sixth consecutive month, the median master trust had outperformed the median industry fund, with the cumulative outperformance over the six-month period being 7.2 per cent.