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Benchmarking International Property in Australian Listed Property Trust Portfolios

Author/s: Tan Yen Keng

Date Published: 1/01/2004

Published in: Volume 10 - 2004 Issue 1 (pages 3 - 29)

Abstract

The percentage of international property held by listed property trusts (LPTs) has tripled in the last five years. However, the performance of these international properties in LPTs is not directly observable, as no index tracking the performance of this particular LPT sector is currently available. This has complicated LPT sector allocation decision-making as well as benchmarking. Furthermore, the diversification potential of the international LPT sector to the entire property trust portfolio cannot be evaluated. The purpose of this paper is to develop an international LPT-sector performance index, and determine the diversification benefits of adding international LPTs to the property trust portfolio. The findings suggest that the addition of international property to property trust portfolios has resulted in diversification gains.

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Keywords

Benchmarking - International Property Diversification - Listed Property Trusts - Property Portfolio - Risk-Adjusted Returns

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