GLOBAL - Ratings agency Fitch has claimed its revamped rating system for real estate asset managers would better reflect not only the proliferation of specialist and niche funds but also the increased sophistication of investment mandates.

"Irrespective of whether real estate asset managers are making direct property investments or investing in real estate-related instruments, a specialised manager assessment framework is needed to identify the managers that possess the requisite specialised capabilities and offer a suitable match for specific real estate investment mandates," said the firm.

Ratings will now factor in specialised backgrounds, investment skills and investment processes when deciding how firms should be rated. However, peer group comparisons have often been difficult to establish, not least because of the significant operational differences between large and boutique fund managers.

"Given the differences between asset management organisations in terms of size, geographical coverage, concentration on selected property type and product range, operating strategy and assets under management… the application of the rating criteria requires careful consideration of the context in which they are applied," said the firm.

Fund manager accountability has long been a focus for European Association for Investors in Non-Listed Real Estate Vehicles (INREV), which in September released metrics designed to measure total expense ratio (TER), real estate expense ratio and ‘leakage' from the gross internal rate of return. The metrics - the result of a two-year project - aimed to boost transparency in a notoriously opaque industry.

Nick Duff, real estate partner at Hewitt Associates, last year claimed "most" property fund managers lacked "the contacts, the systems or the teams" adequately to service UK pension funds.

"All of them pretend they can do it, but two-thirds of them can't," he said.

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