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Australian Property Securities Funds: A Survey of Strategic Investment Issues

Author/s: Tan Yen Keng

Date Published: 1/01/2004

Published in: Volume 10 - 2004 Issue 3 (pages 263 - 282)

Abstract

Property securities funds (PSFs) have become increasingly popular, with over $18 billion of assets currently being managed by Australian PSFs. Property securities funds include the opportunity to invest in a portfolio of listed property trusts (LPTs) managed by professional fund managers, which allows the investor to achieve diversification across the spectrum of LPTs with reduced portfolio risk. Current practices of PSF managers in making strategic investment decisions, as well as how they manage risk are examined in this study. The results show that an active investment strategy is widely used by the PSF managers and the majority of the respondents are in favour of security selection to asset allocation and market timing. The survey recorded 87% of the respondents having formal risk management systems and over three quarters of them having crisis management procedures in place. While the number of PSFs currently investing directly in overseas property securities is small, this is expected to increase significantly in the near future as more PSF managers have indicated their intention to venture overseas seeking investment opportunities.

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Keywords

Investment Strategy - Listed Property Trust - Property Securities Fund - Risk Management

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