INREV teams up with ANREV and NCREIF to measure 670 unlisted funds, reports Jane Roberts
Investors will soon be able to compare the global and intra-regional performance of real estate funds for the first time.
Three industry bodies, INREV, ANREV and NCREIF, have teamed up to create a Global Fund Index to measure 670 unlisted funds in Europe, Asia and the US. The funds have a current value of €519bn, comprise approximately half US funds, with 65 Asian and 285 European, and include core, value-added and opportunistic vehicles.
The project has long been wished for by international investors and fund managers; certainly since INREV was conceived 10 years ago by founders including CBRE Glo-bal Investors’ Pieter Hendrikse and Morgan Stanley’s Willem de Geus, who says: “When we started out with INREV, one of the first things we said was, ‘We’ve got to have a global index.’
“It’s taken a little while, but 10 years later, there is more emphasis on transparency and the industry has become more measureable.” Not least, says Singapore-based de Geus, because of the launch of ANREV’s index for Asian funds last year, which makes it possible for a not-for-profit, membership initiative to get up and running.
The index will allow the non-listed real estate sector to be analysed and compared with other asset classes globally, offering new insights for investors and asset allocators. As the first source of data on the global fund universe, the index will fill a gap along-side established global real estate securities indices, such as that developed by EPRA and its partners, and direct real estate, where there is a wealth of data available.
“As a non-listed funds manager, you want to be able to benchmark yourself against your peers,” de Geus says, “but other people can start looking at this, most importantly, global asset allocators, who have models for equities and bonds but the proxy bench-mark they use for real estate doesn’t repre-sent the way people are working and invest-ing. Now we will have a proper proxy and a time series for that real estate… It helps us to be better positioned in the industry and gets around the idea that real estate isn’t transparent and you can’t understand it.”
Mark Roberts, chairman of the US National Council for Real Estate Fiduciar-ies (NCREIF) and global head of research at RREEF, said that as well as improving “transparency of real estate as an asset class” the index would “help our members make more informed investment decisions”.
Together with other initiatives such as INREV’s fee studies, De Geus expects the data to make investors “more comfortable, more confident, for example when they go to their boards. They will be able to say: ‘This is the universe we are going to invest in, this is how it has performed historically and this is how much we pay.’”
The work on integrating methodologies is starting, but as ANREV’s Asian index is modelled on the same data and calculation method as INREV’s existing index, this part will be straightforward. The web systems are being combined so that managers can submit information about both their Euro-pean and Asian funds to the same place.
NCREIF is different and integration needs more work, says Casper Hesp, INREV’s research director, who is on the joint project working group. An initial index of “top-down” results will be presented at the ANREV annual confer-ence next month.
De Geus hopes there will be analysis by region, by style of fund and by closed-and open-ended funds, while in this day of clubs and joint ventures, he would like to see the definition of a private fund kept as broad as possible.
Other possibilities down the line include “a separate bucket for global funds” to com-pare their performance against other funds.