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Mutual Fund News

A banner year for global real estate funds

jnelson@globeandmail.com

What are we looking for?

How the best-performing real estate equity funds have performed over the past year.

The screen

We looked at fund returns for the year to March 31. U.S. dollar, segregated and duplicate versions of funds were excluded.

What did we find?

Investors continue to pour money into real estate funds as low interest rates drive demand for access to the sector's relatively higher yielding investment trusts.

The iShares Global Real Estate Index ETF topped the chart with annualized gains of 21.3 per cent. When we last looked at the fund on Nov. 23, it had $25.2-million in assets. It had nearly doubled that as of the end of March, with $48.9-million in assets.

Following closely behind the 12-month leader were the Manulife Global Real Estate and Fidelity Global Real Estate B funds with gains of 21.2 per cent and 20.6 per cent, respectively.

Canada's active housing market and investor appetite for the real estate investment trusts have made property a hot topic in the last year. The majority of new initial public offerings priced this year have been REITs and there are more on the horizon; food retailer Loblaw Cos. Ltd. is looking to move $7-billion of its property assets to a REIT in July.

But despite action in this country, the leading equity funds on the list have the majority of their holdings outside Canada.

The iShares ETF is designed to duplicate another index called the Cohen & Steers Global Realty Majors, which represents the top 75 publicly traded real estate companies in the world. The current top holding in both is Mitsubishi Estate Co. Ltd., a Japanese industrial and residential real estate company that builds, leases and manages properties internationally, with its largest business being in Japan. The company's stock is up more than 140 per cent this year.

The second and third funds in the screen are also weighted heavily toward foreign equities. The Manulife Global Real Estate fund has roughly 60 per cent of its assets in the United States and Britain. Fidelity's Global Real Estate fund has 48 per cent of assets invested in the U.S., with one of its largest holdings being mall giant Simon Property Group Inc. That company's stock is up 14 per cent year-to-date.

But while real estate can be hot, it is also volatile: Only one company on the screen beat the S&P/TSX Capped REIT index over the past five years.

*****

REAL ESTATE EQUITY FUNDS - 1 YEAR TO MARCH 31

% return (Mar. 31)% returnAssets
FundSym1-yr3-yr5-yr10-yr20122011201020092008MER($-mil)
iShares Global Real Estate Idx Common ETFCGR-T21.3%13.5%25.4%-3.1%13.1%11.8%0.7348.9
Manulife Global Real Estate21.2%9.7%3.9%29.4%-12.7%9.8%24.9%3.3017.6
Fidelity Global Real Estate B20.6%11.4%1.0%23.2%-6.8%12.7%17.0%-36.1%2.4026.8
Renaissance Global Real Estate19.8%19.6%-8.3%2.580.1
INVESCO Global Real Estate-A19.2%10.7%0.4%22.2%-6.3%9.8%11.2%-32.9%2.573.4
Counsel Global Real Estate A19.0%10.2%23.3%-7.2%12.3%2.882.7
DFA Global Real Estate Securities-Cl A19.0%14.3%2.2%17.7%2.4%15.0%10.9%1.7610.7
Desjardins Global Real Estate-A17.0%9.6%-0.7%20.2%-6.8%9.2%17.2%-36.7%2.714.7
Middlefield ActiveIndex REIT Cl-A16.2%18.8%2.1816.0
AGF Global Real Estate Equity Class15.3%9.3%-0.2%5.5%24.7%-7.7%9.5%19.1%-33.0%3.3118.1
First Asset REIT Income Class A15.0%23.5%21.5%2.5016.5
Investors Global Real Estate A14.6%12.1%-1.4%17.6%0.2%14.4%8.1%2.7493.5
Dynamic Global Real Estate13.7%11.2%5.2%10.2%17.9%2.9%11.4%31.5%-33.8%2.44204.0
BMO Equal Weight REITs Index ETFZRE-T13.7%18.1%13.9%0.62397.9
CIBC Canadian Real Estate12.5%14.8%7.6%10.7%19.0%6.1%23.4%38.6%-39.5%2.9667.5
S&P/TSX Total Return6.1%4.9%2.1%10.0%7.2%-8.7%17.6%35.1%-33.0%
S&P/TSX Capped Real Estate Index9.6%12.2%4.9%7.9%15.2%3.8%24.4%37.2%-44.6%
S&P/TSX Capped REIT7.1%13.1%5.3%6.1%11.1%15.1%15.1%42.4%-43.1%
Source: Lipper

© 2007 The Globe and Mail. All rights reserved.

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