UK property fund returns hit their lowest level in 11 years during the quarter to the end of March, according to the MSCI/AREF UK Quarterly Property Fund Index. 

According to the MSCI/AREF UK Quarterly Property Fund Index, returns stood at just 1.8%, the lowest quarterly level since June 2009.

Among fund types, specialist property underperformed for the quarter (-6.3%), driven by a higher allocation to retail properties and higher gearing levels compared to balanced funds.

Within the retail sector, specialist funds had a 22% allocation to shopping centres versus 2% of balanced funds. Long income funds, the best-performing fund type, had both the lowest retail allocation and gearing levels.

This index measures net property fund returns and tracks the performance of 46 UK pooled property funds, with a net asset value of GBP 50.8 billion as at March 2020.

The contributors to the data include Aberdeen Standard Investments, Aviva Investors, BlackRock, British Land, Canada Life Investments, CBRE Global Investors, Fidelity Fund Management and Grosvenor Investment Management.