GLOBAL - FTSE is looking at extending its series of indices linked to the listed global real estate market to cover the emerging markets and smaller caps sectors.
Gareth Parker, head of index design at the FTSE Group, said the information provider is now looking at how it might widen the range of benchmarks used by investors to cover developments in the emerging markets real estate arena.
His comments come at the same time as real estate investors are turning their attentions to real estate portfolios in Mexico, Brazil and similar environments.
That said, Parker has yet to finalise how the FTSE Group could provide smaller companies access to indices like the large caps NAREIT and EPRA global real estate indices because to be included in the existing large caps indices requires companies have a minimum market capitalisation of $75m.
Investors need to be confident firms they invest in will have sufficiently liquidity to handle their investments should they choose to pull out, said Parker, so building an index of companies which each have a market cap of less than $75m could be difficult.
"What we provide with EPRA and NAREIT is the broadest set of indices but we need to expand further," said Parker.
"People are starting to worry about where future beta is coming from. We are looking at moving into the emerging markets. It would be a logical step to push into smaller cap investments. But $75m is already down into the better small cap arena and I’m not sure how much further down we can go in terms of investment liquidity.
"We are looking to push this out to the emerging markets very soon and small companies if these companies can assimilate the liquidity we require," he added.
According to Parker, companies listed on the FTSE EPRA and FTSE NAREIT indices climbed by just under 35% in value over the last 12 months, compared with a return of 18% for broader equity investment on the FTSE All-World index, and have seen 133% growth over five years.
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