Nordic fund index posts 1.9% return in Q3: IPD

Nordic property fund returns improved slightly in the third quarter of 2012, delivering a 1.9% return compared to 1.7% in Q2 2012, according to the IPD Nordic Quarterly Property Fund Index.

Over the last 12 months the Index has returned 8.2%, although the continued depreciation of the euro continues to contribute positively to the overall return. Of the 10 participating funds, seven continued to produce positive returns for this quarter and nine recorded positive returns in the last 12 months.

The four specialist funds defined as funds with more than 70% invested into one single market sector and with a higher gearing delivered a return of 1.2% compared to balanced funds with a lower gearing which delivered 2.4% for the quarter.

Allocation of property in the index is 39% in Norway, 29% in Finland, 28% in Sweden and 3% in Denmark.

The slight improvement for the Nordic Fund Index is a similar picture as seen for the AREF/IPD UK Pooled Property Fund Index, which rose to 0.4% in the third quarter of 2012. The effect of the eurozone crisis was evidently clear in the result of the IPD Pan-European Fund Index, which posted a negative return of 1.1% for Q2, the first time a negative return has been seen since early 2010. The results for Q3 have yet to be released.

'Although fund performance remains low, it is important to note that the majority of funds continue to produce positive returns even in the current business climate,' said Christina Gustafsson, managing director, IPD Norden.

The IPD Nordic Quarterly Property Fund Index, which is sponsored by Ernst & Young, consists of 10 property funds with a combined Net Asset Value of EUR 2.4 bn and a Gross Asset Value of EUR 5.2 bn at end June 2012.