Due to investor appetite for yield and safe-haven sectors, global listed property had significantly outperformed most major asset classes during 2012, a research paper reveals today.
While fund performance has been impressive in an absolute sense, the Lonsec Global Property Securities Fund Sector Review rates the relative performance as somewhat disappointing.
The Lonsec report reveals that global property securities outperformed global equities by 8.6% over the year to November 2012, and by 8.7% annually over a three-year period.
While both major property securities indices delivered returns in excess of 25% over the year - having rebounded from the lows experienced during the global financial crisis - most managers underperformed their respective benchmark indices over the past year, the report noted.
According to the Lonsec Review, the sector benefited from a generally low growth environment, with investors seeking out higher yielding investments from defensive sectors.
The report also found that overall portfolios were generally defensively positioned, with managers tending to favour large cap, high quality names - reflecting a significant divide now prevalent between the major REITs and their smaller counterparts.
Due to better access to funding at more attractive prices, Andrew Coutts a senior investment analyst at Lonsec noted that larger REIT players are perceived (by investors) to be lower risk than their smaller counterparts.
"With macro uncertainty prevailing, fund managers were not taking material regional bets but instead focusing on stock selection," said Coutts.
Many are 'sticking to their knitting' and focusing on bottom up research in the hope of achieving better relative results by being in the right companies rather than taking large bets on sectors or regions."
With an 8-14% per annum return objective over the long term, the Pengana PanAgora Absolute Return Global Equities Fund is clearly managed by a team with investment acumen and a well thought out process.
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