EUROPE - Investment Property Databank (IPD) has launched a quarterly index that captures the performance of European cross-border real estate funds that are open to new investment.
The IPD Pan-European Property Fund Indices claims to be the first ever 'investable' pooled property fund index, based on a cohort of 18 European cross-border pooled funds with open-ended structures.
The sample of funds has close to €11bn in assets under management and represents approximately 82% of the total market.
German open-ended funds have been excluded from the sample, because they are tracked separately by the IPD German Open Ended Fund Index.
The new index showed that European cross-border pooled property funds delivered an annual euro-denominated total return of 5.0% during 2010, a marked improvement on 2009's -17.2%.
Cameron McVean, head of fund services at IPD, said the new index was significant for three reasons, including the fact that it deepened the transparency of underlying European real estate market performance by introducing a quarterly performance indicator in major European markets.
"Secondly, it establishes a cross border benchmark for managers, providing a means by which to develop a more informed view of market performance when making peer group comparisons," McVean added.
"Thirdly, this is the first ever 'investable' pooled property fund indices for Europe, comprising exclusively open-ended funds available for new investment - a benchmark, until now, noted by its absence."
The greater transparency the new index will provide has been welcomed by the multi-manager and fund of funds industry.
Ivo deWit, global portfolio manager at CBRE Investors, said: "IPD pan-European Property Fund Indices is a representative group of the core-balanced/specialist pan-European funds that the multi-manager industry can access
"It is also available comparatively soon after the quarter end - two months after close of quarter - making it very useful for client reporting and benchmarking."
Further work is currently underway at IPD to provide a benchmarking service, and subsequent attribution analysis, for the direct property held by cross border pan-European investors and fund managers.
The new benchmarking and performance analysis service will result in the formation of a quarterly pan-European direct property benchmark equivalent to the IPD Pan-European Property Fund Indices.
This new service will allow IPD to reconcile the performance differences between cross border pan-European direct and indirect performance accounting for manager fees, leverage and fund costs as well as investment styles.
McVean said: "For these new benchmarks to be fully established across the market, we are reliant on the continued support and demand from our clients for this type of analysis."
