Ivy Funds launches two global real estate funds
Ivy Funds has launched two global funds to help investors and financial advisers pursue the potential opportunities of investment in real estate securities: Ivy Global Real Estate Fund and Ivy Global Risk-Managed Real Estate Fund.
Ivy Global Real Estate Fund will seek to provide total return through long-term capital appreciation and current income. The fund is anticipated to maintain a risk profile similar to that of the broader global real estate securities market. The fund typically will invest in the equity securities of companies in both core property sectors (such as office, retail, multi-family or industrial), and specialty sectors (such as hotel, home building or other real estate). The fund will invest in securities offered by companies active in real estate ownership, development, and investment management.
Ivy Global Risk-Managed Real Estate Fund also seeks to provide total return through long-term capital appreciation and current income. The fund is anticipated to pursue a lower risk profile than the broader global real estate securities market. The investment team will seek to manage risk by focusing on the securities of companies they consider to have lower leverage, lower business risk and/or lower-risk property types. Typical investments will focus on companies investing in the core property sectors. The risk-screening process represents an important difference between the two funds. The portfolio management team generally will exclude companies from the investment universe that:
• Have high financial leverage (greater than 45-50 per cent);
• Have substantial exposure to what are considered non-core asset types (such as hotels and home-building companies);
• Have significant exposure to non-earning assets;
• Have significant exposure to ancillary activities such as merchant building or investment management.
The new Ivy Funds seek to provide investors with exposure to high-quality, professionally managed global real estate with the added potential benefit of active management that seeks to identify securities offering an attractive combination of risk and return.
The new funds are sub-advised by LaSalle Investment Management Securities, a well-known real estate securities investment manager.
“The global real estate sector provides investors another avenue to pursue diversification and income potential,” says Thomas W Butch (pictured), president and chief executive of Ivy Funds Distributor. “Part of our ongoing strategy is to ensure that Ivy Funds continue to offer a range of options that best align with investor needs. With LaSalle, we’re fortunate to partner with one of the foremost names in global real estate securities in support of this objective.”
There is recent evidence of strong investor interest in this asset class. Open-end real estate fund flows in 2012 of USD15bn were nearly double those of 2011, and in just the first two months of 2013 they reached USD6.5bn, surpassing flows for the entire year of 2010, according to data from SimFunds.
Both funds will invest primarily in the equities and equity-related securities of global real estate companies, including real estate investment trusts (REITs) and real estate operating companies (REOCs). They typically will invest at least 80 per cent of net assets in the real estate or real estate-related industries, and will not invest directly in real estate. The funds typically will invest at least 40 per cent of total assets in securities of issuers outside the US.
Keith Pauley, managing director and chief investment officer at LaSalle, says: "We are excited to join forces with Ivy Funds to provide investors with new choices to participate in the growing global real estate securities markets. Real estate securities are an efficient way for investors to participate in global real estate. The new funds will provide investors alternative strategies for participating in global real estate based on their risk and return objectives.”