IPD sets up cross-border property funds index

Investment Property Databank (IPD) has launched its first 'investable' pan-European property index to track the quarterly performance of 18 cross-border European property funds open to investors. The IPD Pan-European Property Fund Indices, published on Monday with a seven-year quarterly history, consists of a small cohort of funds with an aggregate value of EUR 11 bn, reflecting an estimated 82% of the total market.

The samples comprises open-ended funds, utilising RICS Red Book valuation methodology, or local best practice. German open-ended funds are however not included because their performance is already tracked in the IPD German Open-End Fund Index.

'The new index deepens the transparency of underlying European property market performance. Secondly, it establishes a cross-border benchmark for managers and thirdly, this is the first ever investable pooled property fund index for Europe, comprised of open-ended funds available for new investment,' said Cameron McVean, head of fund services at IPD.

The funds' total return of 5% last year marked an improvement on the 17.2% loss suffered in 2009, but failed to match the 14.5% total return of the US's NCREIF fund index, as well as the 14% total return on the UK's pooled property fund index (PPFI), and the 9.1% return on Australia's PPFI.

Quarterly growth in the European cross-border pooled property funds index resumed in Q2 2010, following nine consecutive quarters of negative returns. In the fourth quarter of 2010 the funds posted a total return of 2.4%, their best quarterly showing since Q2 of 2007.

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.