Almost all property funds have outperformed the equity market over the five years to 31 December 2001, according to IPD’s latest research.
The IPDs Property Funds Review 2002 showed that 95% achieved a return above 9% compared with an average return from equities of 7.3%
The review studied the performance of 227 live portfolios with a total value of £98bn as at 31 December, representing around 80% of the funds in the IPDs UK database.
IPD director Kevin Swaddle said: “Everyone knows that property outperformed equities and gilts in 2001 and is now the best performer over 10 years.
“What this research reveals is all but a handful of the individual funds we measure have outperformed the equity market average over the last five years.”
More property funds managed to outperform the All-Property average in 2001 than in recent years.
The review found that the average direct property return was 7% in 2001, substantially below the 7.6% achieved by the median property fund.
The top-performing 20% of funds in 2001 returned a total of 11.1%, outperforming the IPD universe by 3.8%.
Attributes that differentiated these funds included a low level of net investment, a high weighting in City offices and significant capital growth.
The IPD said sales and developments made an above-average contribution to returns across the market, while held properties and purchases generally acted as a drag on performance.
Income return made up the largest part of total return for the vast majority of funds, but capital growth remained the primary differentiator of fund performance.
Despite propertys strong performance relative to other assets in 2001, only 52% of funds were net investors over the 12 months.
EGi News 10/09/02
