Vanguard and Colonial First State (CFS) have emerged as the only two listed property fund managers to be awarded a highly recommended rating in a Morningstar's review of the sector.
Analysts praised the Vanguard Wholesale Property Securities Index fund for its ability to produce strong market returns at low expense to investors.
The fund's low turnover and tax-effectiveness were also recognised.
The CFS Wholesale Property Securities Opportunities fund earned top marks for its ability to ignore the index and as such exercise more freedom in its stock picking.
Morningstar pointed out the strategy meant the manager could invest in the mid-cap and small-cap areas of the market which is one of the strengths of the management team.
However, Morningstar suggested that investors use the fund as a satellite component in conjunction with a core listed property strategy.
Morningstar said there was a trend from some managers to expand their mandates allowing them to look for investment opportunities both locally and globally.
The research house said it supported this trend but was wary about managers who might eventually put too much emphasis on overseas stocks at the expense of local offerings.
One area of strength throughout the sector was the experience of most of the management teams.
Morningstar found the lead portfolio managers had on average in excess of 17 years experience in property, while the investment teams averaged 12 years of industry experience.
