Italian pooled property funds delivered a positive 0.2% total return over the six months to June 2010, according to the IPD Italian Pooled Property Fund Indices (Italian PPFI). The biannual return contributed modestly to the 0.9% annual figure, which was driven by a 70 bps return over the second half of last year.
Within the Italian PPFI universe which comprises 17 'blind pool' and 21 'seeded' funds with an aggregate net asset value of 8.8 billion at June 2010 seeded funds delivered a strong annual return, at 2.2%, while blind pool funds returned a negative 1.6%. In H1, blind pool and seeded funds returned -0.8% and 0.9%, respectively.
Drilling further into the universe within the blind and seeded fund pools, the first half performance for balanced and specialist funds were -0.6% and 0.8%, respectively, and for the 12 months, specialist funds outperformed balanced funds by nearly four percentage points at 2.6% and -1.3%, respectively. Overall, seeded and specialist funds outperformed the all pooled fund average, while blind pool and balanced funds both underperformed against the Italian PPFI benchmark on both a six and 12-month basis.
Over the six months to June 2010, all pooled funds outperformed Italian equities, which returned -14.5%, and property equities, which delivered a -10.4% return. Italian bonds outperformed the Italian PPFI, with 1.4% over the first half of the year. On a five-year annualized basis, Italian PPFI funds returned 5.0%, outperformed equities (-5.9%), property equities (-16.5%) and bonds (3.8%), providing further evidence of the low correlation of real estate with other asset classes.
Luigi Pischedda, Country Manager Italy at IPD, said: "The modest positive biannual performance delivered by Italian PPFI funds contrasts with the recovery we have seen in the second half of 2009. However, if we look closely at the contributing components of returns, capital returns delivered a stronger performance than that achieved in the six months to December and in the 12 months to June 2009. Although capital returns still drift in negative territory, the all pooled funds -1.2% capital return recorded in H1 2010 is the lowest rate in the last two years."