The performance and diversification potential of non-listed value-add real estate funds in Japan

In the aftermath of the COVID-19 pandemic, non-core investments are gaining traction amongst institutional investors due to the shifting preference towards investment vehicles that position higher on the risk-return curve. Non-listed value-add real estate funds in Japan are one such vehicle. This re...

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Bibliographic Details
Published in:Journal of risk and financial management 2022-05, Vol.15 (5), p.1-16
Main Authors: Hoesli, Martin, Newell, Graeme, Lai, Rose Neng
Format: Article
Language:English
Subjects:
Commercial real estate
Diversification
Institutional investments
Investment advisors
Investment policy
Japan
non-listed real estate fund
Pension funds
Portfolio management
real estate investment strategy
REITs
risk-adjusted performance
Sovereign wealth funds
value-add real estate fund
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Summary:In the aftermath of the COVID-19 pandemic, non-core investments are gaining traction amongst institutional investors due to the shifting preference towards investment vehicles that position higher on the risk-return curve. Non-listed value-add real estate funds in Japan are one such vehicle. This research develops a comprehensive bespoke benchmark total return index using the ANREV database to reflect the performance of Japan-focussed non-listed value-add real estate funds. We compare the performance of such funds with that of other asset classes and perform portfolio and regression analyses. We conclude that there are several advantages to investing in those funds, including: (1) strong absolute total return performance, (2) competitive risk-adjusted performance, and (3) significant portfolio diversification potential in a mixed-asset portfolio context. The strategic implications for real estate investors are also assessed.
ISSN:1911-8074
1911-8066
1911-8074
DOI:10.3390/jrfm15050198