UK - HSBC Investments has brought in a seven-strong team of fund selection specialists in a move the firm hopes will increase property-hungry investors’ appetite for multi-manager funds.
Guy Morrell, who will head the UK-based team, told IPE Real Estate: "It makes sense to expand the capability, given the maturity of the asset class. It’s a vote of confidence in real estate, especially in respect of the multi-manager dimension."
He continued: "It’s apparent [to pension funds and other investors] that real estate helps their risk—return profile. Dutch and Scandinavian investors have long invested internationally in real estate, but that hasn’t been the case across the world. In the past, UK investors invested internationally in a piecemeal fashion. Now pension funds and fund managers are doing it with scale, local partners and a determination to properly resource it."
The team, which has been together for three years in another part of the bank,
will also offer specialist property mandates and fund of funds while its remit is to cover both direct property funds and listed securities.
"Property funds are growing in importance compared to direct investment," said Morrell.
"With direct [investment], it’s an issue of scale because buildings are large things and getting local knowledge can be difficult. Listed property is international and liquid – but you won’t the benefit of low volatility that you do with direct.
"They’re very different but that doesn’t mean you should focus exclusively on one or the other," he added.
New York and China specialists – yet to be recruited – will eventually work with the team in their local markets. That said, the limited fund culture – and therefore expertise – in China is already proving an obstacle to recruitment.
He played down long-held investor scepticism over fees associated with multi-manager funds.
"Investors rightly focus on fees but the issue isn’t the fees themselves but whether they’re justified. Of course, I’d say ours are well worth it. So far, 200 funds have been launched this year. To understand a dynamic market isn’t easy," concluded Morrell.