The Grosvenor Liverpool Fund delivered the highest annual return of any unlisted property fund in 2015 according to AREF/IPD Property Funds Index.
The fund, which largely consists of the Liverpool ONE shopping centre, delivered an annual return of 34.9%, well ahead of the Unite UK Student Accommodation Fund in second place, which returned 23.4%.
The index showed unlisted real estate funds returned 12% over 2015, compared to the 13.8% delivered by direct property.
Balanced funds – those that have a more balanced allocation across the different sectors of the market – returned 12.5%, while specialised funds returned 12.9% and long income funds 8.1%.
| 2015 return | 5 yr return | |
|---|---|---|
| All funds | 12 | 9 |
| Balanced funds | 12.5 | 9 |
| Specialist funds | 12.9 | 9.4 |
| Long income funds | 8.1 | 8.7 |
| Direct property | 13.8 | 10.8 |
| Equities | -2.2 | 4.8 |
| Property Equities | 5.1 | 12.3 |
| Bonds | 1 | 5.4 |
| Inflation | 1.2 | 2.7 |
SOURCE: AREF/IPD, MSCI, JP Morgan 7-10 Years
Among funds, performance was strongest for those with a focus on either the industrial or office sectors, as returns mirrored those of direct property investments in the best-performing sectors.
In the retail and alternative sectors, fund performance was considerably more mixed – with a high of 23.4% delivered by the Unite UK Student Accomodation Fund.
The index measures 46 unlisted UK property funds with a NAV of £44.2bn. Unlike the Direct Property Index, it includes the effect of developments, transactions, cash and debt in funds on their performance.
Over the last five years, the UBS Central London Office Value Added Fund has delivered the highest average annual returns, at 22.7%, while the Quercus Healthcare Property Partnership has delivered an average annual return of -8.7%, making it the worst performing.
Since 2010, the index has produced an average annual return of 9%, above the 4.8% of equities and 5.4% of bonds, but below the 12.3% delivered by property equities and 10.8% returned by balanced property.
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