Unlisted property funds in the Nordic region collectively stood out in the first quarter of 2012 as the top ranking market among the regional fund groupings tracked by property index maker IPD.
Quarterly total return of 3% beat the IPD Australian, German, UK and Pan-European fund indices. Income distribution yield stood at 4.3% on an annualised basis.
Part of the explanation for the performance is the volatility of returns frmo funds in the region. In this the Nordic property funds are more like their UK peers. However, the German OFIX index of open ended funds primarily focused on the domestic market has been far more consistent in providing quarter on quarter returns.
The Pan-European index exhibits return volatility somewhere between the levels seen from Nordic and German property funds. It was dragged down by underlying asset values falling in markets such as Spain and Italy over the quarter.
Another consistent performer is the Mercer/IPD Australia Monthly Property Fund Index – Core Wholesale for Australia. It has returned 2-3% per quarter over the past two years, from a group of 17 wholesale funds. Annualised returns have been about 10% through 2010-1012, with the income distribution yield above 6% per year.