UK pooled property funds turned in their worst ever performance in the last quarter of 2007, with the IPD UK Pooled Property Fund Indices delivering a 9.1% total return in the period, the worst result recorded since it began in 1990.
UK pooled property funds turned in their worst ever performance in the last quarter of 2007, with the IPD UK Pooled Property Fund Indices delivering a 9.1% total return in the period, the worst result recorded since it began in 1990.
In the quarter, the all pooled funds composite outperformed the FTSE Real Estate Index, which delivered a -15.1% return, but fell well short of UK long-dated gilts and equities, which came in at 4.7% and -0.3% respectively.
The full-calendar year return to all pooled property funds was also negative, at -6.7% and a record 12-month low since the third quarter of 1991.Once again, pooled property funds outperformed real estate equities, which returned a massive -36.7% performance for the full-year but underperformed UK long-dated gilts and equities.
However, the longer-term performance of pooled property funds was more positive, with property funds returning 12.4% on average each year over a ten-year period and outperforming gilts, equities and real estate equities, which returned between 6.1% and 8.2%. ‘The 2007 year end figures for the IPD UK Pooled Property Fund Indices clearly show that property funds have experienced a serious down turn in the last six months. However, the ten-year results do demonstrate a key strategic role for this asset class within the longer-term asset allocation plans of institutional investors.
Residential funds, especially those focused on student accommodation, were the best performers for the quarter. Office sector funds, especially those in London's West End and Mid Town, outperformed retail and industrial funds.
