Unlisted property funds with a large exposure to the retail market saw their returns continue to drop in the final quarter of 2020.
Specialist retail property funds in the MSCI/AREF UK Quarterly Property Fund Index posted an average return of -35% for the three months to 31 December last year.
The worst performer was the Hercules Unit Trust, which invests in retail warehouse parks, which saw returns of -23% for the period, with an overall return of -62% for 2020. The fund’s net asset value has fallen from £526.8m at the end of 2019 to £193.8m at the end of last year.
Nuveen Real Estate’s UK Shopping Centre Fund saw a near -20% drop in the three months to December last year, posting a -51% overall return for 2020.
The specialist retail funds were the worst-performing fund type in the MSCI/AREF index, all posting negative returns for the last three months of 2020.
By contrast, long-income funds delivered the best performance with an average total return of just over 1%.
The best performing long-income fund was the KFIM Long Income Property Unit Trust, which posted a return of 2.1% for the final quarter of 2020. The fund, which invests directly in UK property assets that exhibit long and secure characteristics, saw its net value rise from £796m in December 2020 to £829m at the same point last year.
Aberdeen Standard’s Airport Industrial Property Unit Trust was the highest performer overall, with a return of 9.7% for the three months to December 2020. The fund invests in, develops and manages airport-related industrial and distribution properties in the UK, and has a net asset value of £583m.