Property is thrift
With equity returns staying stubbornly low, pension funds have been forced to reconsider investing in property. What had become an unfashionable asset class in many major markets has turned out to be the best performer of the past decade.
|Fund managers realize property has been performing for years|
PENSION FUNDS ARE showing renewed interest in property as an asset class as the expectation of stunning equity returns fades. In difficult times these funds have been forced to refocus on asset liability management and have learnt the hard way that a diversified portfolio is a prerequisite of good performance.
Investors are therefore keen to consider alternative investments and property is beginning to receive the attention that is its due. Somewhat belatedly, fund managers have come to realize that property has for years been outperforming other asset classes and matches better with pension liabilities than equities do.
Property's outperformance of other asset classes on a global basis has helped to draw the attention of institutional investors worldwide. "One thing that has triggered renewed interest is that, as of last December, property has been the best performer over 10 years," says Cliff Hawkins, head of UK property at UBS Global Asset Management. This holds true for property globally. In the 10-year period to April 2003, global property returned 11.5%, compared with 8.1%