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Research - JULY 12, 2018

Australian core funds see 12-month double-digit total returns

by Andrea Zander

Core funds in Australia saw a total return of 11.75 percent from July 2017 to June 2018, further illustrating the strong performance of nonlisted real estate investment vehicles in the Australian market, according to the latest ANREV Australia Core Open End Fund Monthly Fund Index (ACOE).

The capital growth component increased to 6.98 percent, compared with 6.7 percent recorded in the prior period between July 2016 and June 2017. The income component amounted to 4.49 percent, 580 basis points less than in the previous period. These are the first full financial year returns to be reported by the ANREV ACOE Index since its launch in August last year.

Office-focused funds delivered the best returns, with a one-year financial return of 14.99 percent and capital growth of 10.17 percent. Diversified funds returned 12.19 percent, with capital growth of 7.13 percent forming a strong component of the total return. They were followed by industrial funds with a total return of 10.73 percent and retail funds with 9.12 percent.

The ISPT 50 Lonsdale Street Property Fund outperformed the index with a total return of 19.02 percent, followed by the APPF Office Fund, which delivered a net total return of 18.20 percent over the past financial year. The Investa Commercial Property Fund was ranked third with a total return of 16.6 percent.

ANREV launched the index in August 2017 in response to calls by fund managers for a reliable monthly index for Australian core open-end funds. The index measures post-fee NAV total returns of core nonlisted wholesale funds covering the office, retail, industrial/logistics and diversified sectors. ANREV is working together with the contributors to develop the index further in order to give more granular information on the returns to investors.

The ANREV Australia Core Open End Fund Monthly Index currently includes 19 funds with a total GAV of A$102.05 billion ($75.54 billion). The NAV of the index is currently A$83.39 billion ($61.73 billion) and the index has grown by A$9.5 billion ($7.03 billion) since the end of June 2017, with a stable gearing level of 15.54 percent (compared with 13.98 percent in June 2017).

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