Share of capital raised for funds of funds doubles
The share of total capital raised for non-listed real estate funds of funds doubled in 2017, proving that the vehicle became more popular among investors due to its significant diversification options, according to the latest ANREV/INREV Funds of Funds study.
Last year saw in total US$160.2 billion of fresh equity raised for non-listed real estate, with US$8.5 billion or 5.2 per cent destined for funds of funds.
According to the study, funds of funds delivered positive returns across all styles, structures, regional strategies and size, with one in seven investors planning on increasing their allocations to funds of funds over the coming two years.
Across global strategies, funds of funds were the largest share of vehicles both by number and size, making up just under 50 per cent of the overall vehicles and representing 78.6 per cent of total net asset value.
They were followed by vehicles with a European strategy, representing 33 per cent, while those targeting the Asia Pacific represented 20 per cent.
The study also found that Asia Pacific funds of funds posted impressive returns of 15.1 per cent last year, which was a strong comeback from the -3.3 per cent recorded a year before.
Amélie Delaunay, director of research and professional standards at ANREV, said: “The scale of the returns in Asia Pacific in 2017 are significant, demonstrating their increasing appeal in the region.”
“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.”
AUTHOR
Oksana Patron
Recommended for you
Infrastructure assets are well-positioned to hedge against global uncertainty and can enhance the diversification of traditional portfolios with their evergreen characteristics, an investment chief believes.
Volatility in US markets means currency is becoming a critical decision factor in Australian investors’ ETF selection this year.
Clime Investment Management is overhauling the selection process for its APLs, with managing director Michael Baragwanath describing the threat of a product failure affecting clients as “pure nightmare fuel”.
Global X will expand its ETF range of exchange-traded funds next month with a low-cost Australian equity product as it chases ambitions of becoming a top issuer of ETFs in Australia.
