Can Global Real Estate Fund Inflows Keep Coming in Q3?

Low rates all around the globe might not be doing fixed income investors and favors, but for real estate investors, it’s a great time to invest in properties via financing terms with low interest rates. Another byproduct is an influx of investment capital into global real estate funds.

“Real estate investors committed more capital to global funds but to fewer managers in the second quarter of 2020, said a report released Wednesday by Preqin,” a Pensions & Investments article noted. “Although the number of global real estate funds closed in the second quarter dropped to 53 from 78 in the first quarter, real estate capital raised increased to $39 billion during the quarter ended June 30 from $28 billion in the quarter ended March 31.”

In particular, large institutional funds are benefitting from this influx of capital investments.

“Funds from large, established real estate managers such as Blackstone Group and Rockpoint Group fared well with their funds during the quarter,” the article pointed out. “Blackstone Real Estate Partners Europe VI closed at $10.6 billion in April, while Rockpoint Real Estate Fund VI raised $3.8 billion in June. Combined, those funds represent 37% of the total capital raised in the quarter.”

Given the uncertainty of the Covid-19 pandemic, it might seem that investors are hesitant to turn up the dial on risk. However, when it came to global real estate funds, the second quarter data said otherwise.

“Funds focused on riskier strategies raised the most capital, with opportunistic funds raising $22 billion in the second quarter,” the article added.

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Getting Global Real Estate Exposure

Another way for investors to get real asset exposure is via real estate. One place to look is via real estate-focused ETFs like the FlexShares Global Quality Real Estate Index Fund (GQRE).

The fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Global Quality Real Estate IndexSM. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to quality, value, and momentum factors relative to the Northern Trust Global Real Estate Index.

Another fund to check out is the Xtrackers International Real Estate ETF (HAUZ), which seeks investment results that correspond generally to the performance of the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index. iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index is a free-float capitalization weighted index that provides exposure to publicly traded real estate securities in countries outside the United States, Pakistan, and Vietnam.

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