Social distancing hits AREIT returns
However, it fared better than its global counterpart index which lost 18.6%.
On a fund-specific basis, the median AREIT manager lost 14.3%, a slight improvement on the index.
Senior investment analyst at Zenith, Dan Cave, said the social distancing policies which saw people working from home had a profound impact on property returns.
However, he felt property still had a role to play in portfolios for its diversification benefits and yield advantages. Cave highlighted alternative assets that were away from offices or industrials such as self-storage and data centres which offered lower cyclicality and reduced portfolio volatility.
“REITS offer diversification benefits for multi-asset portfolios due to the asset classes’ underlying characteristics. There are also yield advantages owing to the rental income focus, and the opportunity for further sub-sector diversification across the emerging alternative sectors which provides lower levels of cyclicality compared to traditional property types,” he said.
"The outbreak of COVID-19 has quickly translated into a severe shock for the global economy and real estate markets, and the situation continues to be fast-moving. Zenith will continue to observe the sector closely, with a focus on how fund managers, landlords and tenants respond to current challenges and how this likely impacts or rewards investors."
AUTHOR
Laura Dew
Recommended for you
International equity ETFs have recorded their third consecutive month with net inflows above $1 billion, according to Betashares, for advisers looking to capture this growth in client portfolios.
For advisers considering their clients’ fixed income allocations, VanEck research has detailed which elements of fixed income and credit have performed the best since the start of 2024.
There is a role for advisers to include capital securities in portfolios to provide diversification within clients’ fixed income allocations, according to fund manager Wellington Management.
BlackRock’s iShares fixed income ETFs have reached US$1 trillion in assets under management across the globe, a year after the global bond ETF industry hit US$2 trillion.
