Global listed property outperformed other asset classes in 2012 owing to the investor search for yield and defensive assets, a recent report by Lonsec has stated.
The Lonsec Global Property Securities Fund Sector Review showed that both global listed fund and global real estate investment trust (REIT) indices delivered in excess of 25 per cent over the year, a rebound from lows during the global financial crisis (GFC).
Global property securities outperformed global equities by 8.6 per cent over the year to November 2012, and by 8.7 per cent per annum over a three-year period.
However, the majority of managers underperformed their respective benchmark indices over the past year.
"The sector has been the beneficiary of a generally low growth environment, with investors seeking out higher yielding investments from defensive sectors," Lonsec senior investment analyst Andrew Coutts said.
"Like-for-like performance comparison between funds remains difficult, since a number of funds are benchmarked to different indices," he said.
The review also found that overall portfolios were generally defensively positioned, with managers tending to favour large cap, high quality names.
This bias in portfolios is also considered reflective of the divide which has opened up between major REITs and their smaller counterparts.
"In general, larger REIT players are thought to be better positioned from a risk perspective relative to their smaller counterparts. This is due to better access to funding at more attractive pricing - with lenders having adopted more stringent lending criteria - and the tendency for high quality property to be more resilient in periods of economic difficulty," Mr Coutts said.
"With macro uncertainty prevailing, fund managers were not taking material regional bets but instead focusing on stock selection. Many are 'sticking to their knitting' and focusing on bottom up research in the hope of achieving better relative results by being in the right companies rather than taking large bets on sectors or regions," he said.
