New yield on investment indicator for real estate funds in Switzerland

The Swiss Funds Association is launching the trademarked SFA Yield on Investment Indicator (SFA ARI) for exchange-listed Swiss real estate funds, allowing investment yields generated by funds to be compared for the first time.

The SFA ARI is freely available from the SFA and Swiss Fund Data (SFD) websites.

“With this indicator we want to enhance transparency in the real estate funds business and comparability between the various products, while also standardizing the underlying data,” explained Martin Thommen, President of the SFA.

“The SFA ARI is based on the performance of the real estate portfolio rather than the stock exchange prices. We are convinced (it) will become a key benchmark for the real estate funds industry,” said SFA CEO Dr Matthäus Den Otter.

The yield on investment is one of the most important key figures for the real estate fund sector. It offers information on the overall yield of a real estate fund, assuming all distributions of income and capital are reinvested at the net asset value. 

This shows the change in the net asset value between the beginning and the end of the reporting period. The annual valuations of the real estate portfolio are taken into account, i.e. unrealized gains and losses are also included in the calculations in addition to the realized capital gains and losses.

Price swings on the stock exchange are not factored in. This allows for a more lasting assessment of the performance of a fund than the exchange prices, the SFA said.

Tthe SFA “Real Estate Funds” specialist committee decided to launch a quarterly indicator on the basis of the respective annual reports to make it possible to compare the actual yields of listed Swiss real estate funds at the product level.

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