Research - OCTOBER 31, 2016

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U.S. investors shift toward higher-return strategies

by Jody Barhanovich

U.S. pension funds have increased redemptions from core, open-end U.S. property funds, according Greysteel’s Snapshot: Pension Tension report, making way for value-added and opportunistic real estate funds.

More than $3.2 billion redemption requests have been made from core, open-end funds, including $1 billion from JP Morgan Strategic Property Fund, $700 million from PGIM Real Estate’s PRISA fund, and $470 million from UBS Trumbull Core Property Fund, according to the report.

According to Greysteel, investors are shifting from core strategies to higher return strategies because of market peaks and lower yields. From 2010 to second quarter 2016, annualized returns from core U.S. real estate funds ranged from 12 percent to 13 percent. Annualized returns from core U.S. real estate funds year-to-date have been at about 4 percent and are forecast to be at 8 percent by the end of the year. Typical returns from value-add, open-end commingled fun

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