Benefits of Open Architecture and Multi-Management in Real Estate Markets— Evidence from French Nonlisted Investment Trusts

This publication was produced in partnership with Swiss Life Asset Managers France as part of the “Real Estate in Modern Investment Solutions” research chair at EDHEC-Risk Institute, which ...

Author(s):

Béatrice Guedj

Shahyar Safaee

This publication was produced in partnership with Swiss Life Asset Managers France as part of the “Real Estate in Modern Investment Solutions” research chair at EDHEC-Risk Institute, which examines the role of real estate in welfare-improving forms of investment solutions, with a particular focus on the efficient use of dedicated real estate investments as part of the performance and hedging components of innovative retirement solutions.

This study, “Benefits of Open Architecture and Multi-Management in Real Estate Markets—Evidence from French Nonlisted Investment Trusts”, reviews the risk and return characteristics of Sociétés Civiles de Placement Immobilier (SCPIs), a form of French non-listed real estate funds, to assess whether modern investment management techniques such as fund selection and portfolio allocation can be applied to the SCPI universe and create value for an investor wishing to be exposed to French non-listed commercial real estate.

We find that the commercial SCPI market offers a significant amount of dispersion in risk and return, and portfolios of SCPIs exhibit a substantially lower level of volatility than the “average SCPI”.

We also find several attributes to have explanatory power with respect to such differences in risk and performance.

Both results suggest that value can be added by selection and allocation decisions, which could form the basis of a welfare-enhancing open architecture multi-management approach to investment in SCPIs.

Type: EDHEC Publication
Date: le 28/06/2021
Research Cluster : Finance

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