A report by IPD and niche asset management specialist Goshawk has tackled the uncertain area of defining active asset management and has measured its contribution to investor returns at a market level.
Using the broad scope and capabilities of IPD data, their collaboration has quantified the relative effect on investor performance in the report “The effect of active asset management on returns”.
The report examines closely the key components and drivers within the active asset management space. This has been undertaken by analysing real estate investment performance trends using the industry standard IPD UK Quarterly Property Index, in conjunction with Goshawk providing qualitative assessment from broader market fundamentals.
The report finds that active asset management made a positive contribution to returns in 2013 providing a noteworthy additional boost to returns.
Properties with no active asset management in 2013 underperformed.
The relative total return performance gained from active asset management was +0.18 per cent y/y.
The effect of no activity relative to the market was -0.53 per cent y/y.
Properties which saw a re-gearing of leases saw an average absolute total return of 7.6 per cent q/q during the Q4 2013, compared to a market return of 4.4 per cent q/q.
Phil Tily, executive director and head of UK & Ireland, IPD, says: “In this new analysis, we are able to show the property industry why asset management matters, and demonstrate it through valid, simple and clear data. We have long known that asset management makes an important contribution to investor returns, but before this research and the resulting report, no-one has been able to say why, how or even what this contribution was.”
Charles Gardner, director, Goshawk, adds: “Active asset management matters more than ever before, but is poorly understood. IPD and Goshawk set out to define what active asset management is and, for the first time, to quantify what it delivers. Our collaboration succeeded on both counts, and will help investors to consider how they can improve returns through greater focus on active asset management.”