The FTSE EPRA/NAREIT Developed Real Estate Index posted positive returns for the quarter, outperforming many broader developed market equity indexes. Within the real estate index, performance was mixed; shares traded down in the UK and many European countries, while U.S. shares rose. Central bank actions in the eurozone and Japan and increasingly dovish perceptions of the Federal Reserve's monetary policy stance supported equity markets during the quarter. Rebounding commodity prices also provided some relief to natural resource companies and exporters. As the period ended, global markets fluctuated wildly in response to the UK vote in favor of leaving the European Union.
The Global Real Estate Fund returned 2.78% in the quarter compared with 2.91% for the Lipper Global Real Estate Funds Average and 3.74% for the FTSE EPRA/ NAREIT Developed Real Estate Ix. For the 12 months ended June 30, 2016, the fund returned 10.00% versus 8.90% for the Lipper Global Real Estate Funds Average and 12.57% for the FTSE EPRA/ NAREIT Developed Real Estate Ix. The fund's average annual total returns were 10.00%, 7.74%, and 14.12% for the 1-, 5-, and Since Inception (10/27/2008) periods, respectively, as of June 30, 2016. The fund's expense ratio was 1.05% as of its fiscal year ended December 31, 2015.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The Global Real Estate Fund charges a 2%
redemption fee on shares held 90 days or less.
The performance information shown does not reflect the deduction of the redemption fee;
if it did, the performance would be lower.
We have a significant position in the U.S., the largest and most mature market within global commercial real estate. Occupancy rates and rents are increasing in many markets in the U.S. across a range of property types. We believe that commercial real estate should benefit from constrained new supply in conjunction with moderate demand growth. We have a large weighting in Japan, where we believe our holdings are well positioned to benefit from a reversal of deflationary pressures. We also maintain a substantial position in Hong Kong, where we focus our efforts on companies with high-quality properties in attractive locations. The lack of available land for commercial and residential construction should benefit operating fundamentals over the long run.
The supply/demand balance remains favorable in most markets where we invest. The construction of new commercial real estate projects has remained reasonably restrained as the global economic recovery has been moderate and financing has been more restricted relative to prior cycles. Supply pipelines are increasing, though, and are something we watch closely. Demand, while positive today, can change quickly as we saw in the weeks following the UK referendum. As a result, we now expect some companies to delay making decisions about their London office footprints. This will likely hurt office landlords' ability to increase rents and may manifest itself in lower property values in the short term.