July 4 2022
High Inflation will persist, and a recession is a real possibility
There are 28 sectors and subsectors available
Is now an attractive entry point into the asset class?
Our benchmark, the GPR 250 REIT World Index produced a total return of -13.28% in US dollar terms during the first five months of 2022. Tightening monetary policy and inflationary pressures continue to challenge markets, and recession risks are increasing as a result. Global Real Estate is not exempt from this; however, we believe the asset class will demonstrate its resilience as the year progresses. This 2-minute video graphically represents how the various REIT sectors have posted record high earnings growth in Q1 2022, higher than in the final quarter of 2019 right before the onset of the pandemic.
Performance
We remain pleased with the excess returns we have delivered over most time-periods, barring the last year. On a country level, our short-term underperformance is the result of our lower than benchmark exposure to Japan. Our underweight to the Lodging sector as well as our overweight to Residential and Industrial sectors also detracted from our relative returns.