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Investment Styles and Performance in the Australian Unlisted Wholesale Property Fund Market

Author/s: David Higgins

Date Published: 1/01/2010

Published in: Volume 16 - 2010 Issue 3 (pages 254 - 272)

Abstract

Unlisted wholesale property funds are an established property investment product which offers institutional investors an attractive approach for exposure to the Australian commercial property market. This research benchmarks the investment styles of the property funds covered by the Mercers unlisted property fund index with reference to IPD/PCA Property Investor Digest indices over the 2001–2009 period. Based primarily on tracking error analysis, this research identified a range of structured and active investment styles in the selected property funds. This appears to be linked to debt levels and to be sector specific with the relatively highly geared office property funds being the most affected by changes in property market conditions. Further research is recommended as to the impact of debt funding on investment performance measures. However, this research shows how investment evaluation techniques can be a valuable decision making tool for an astute investment into unlisted wholesale property funds.

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Keywords

Commercial Property Markets - Investment Styles - Tracking Error - Unlisted Property Funds

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