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Funds of funds post record high €43.4 billion AUM in 2020

Continued evolution of funds of funds industry with growth in demand for large, core style, open end vehicles with global strategies

14 July 2021, Amsterdam – Funds of funds globally increased their total value of assets under management (AUM) to a record high of at least €43.4 billion at the end of 2020, marking the third consecutive year of growth, according to the ANREV / INREV /NCREIF Fund Manager Survey 2021.

The Fund of Funds Study 2021, jointly published by INREV and ANREV today, paints a similar picture of a consistently dominant appetite for large, core style funds of funds with global strategies, in particular.  

Both studies highlight investor interest in funds of funds that offer the benefits of scale, sector and geographic diversification across a wide array of non-listed estate investment strategies, and that follow a core strategy. The combined data reflect the continuing trend toward investor consolidation as well as greater focus on strategic reviews – factors which are likely to drive demand for funds of funds targeting global strategies. 

Global strategies dominate

Funds of funds with a global strategy make up the largest share of the INREV / ANREV Funds of Funds Universe, representing 70% of the total by number, and 95% by the total NAV. Those with a European investment strategy represent 22% of the universe by number (4% of total NAV), while those targeting Asia Pacific account for 9% by number, and only 1% of total NAV. The universe does not include a single fund of funds targeting North America.

Growth of core style funds of funds 

Funds of funds with a core style make up almost half (48%) of the universe by number, but  94% of total NAV. Core style funds of funds tend to be large with an average NAV of €1.8 billion. However, the three largest core style funds of funds have an average NAV of around €5.5 billion, representing 78% of the total value of the Funds of Funds Universe. 

Value added funds of funds account for just 5% of total NAV, with an average NAV of €112 million per vehicle. Funds of funds with an opportunity investment style make up the remaining 1%, with the average NAV per vehicle being €89 million.

In the 2021 Funds of Funds Study, core style funds of funds outperformed non-core for the fourth time in the last five years, with returns of 1.9% and -3.1% respectively in 2020.

On average, funds of funds with a core style invest in 25 managers. This is more than double the equivalent number for non-core vehicles, which on average select 10 managers ranging between a minimum of six and a maximum of 17. 

Performance by vintage  

Older vintage vehicles – those launched between 2001 and 2007 – have historically underperformed, and 2020 was no exception with a total return of -5.1%. However, the sharpest decline in overall performance was reported for younger vehicles with vintages between 2015 and 2020, with a total return of 0.3%, down from the 8.9% recorded in 2019.  

Despite delivering average positive net returns for 11 consecutive years, the performance of funds of funds with vintages between 2008 and 2014 also slowed, posting total returns of 1.7%, compared to 6.6% a year earlier. 

Iryna Pylypchuk, INREV’s Director of Research and Market Information, said: ‘Funds of funds continue to be an important vehicle for investors; however, the landscape is evolving with clear differences in terms of strategy, style and size, alongside the widening spectrum of target investment routes. This evolution is a direct result of changing investor landscape and a growing appetite for larger, core style funds of funds, predominantly targeting global strategies. Given investors’ changing priorities we expect this trend to continue in the coming years, but it is too early to draw firm conclusions on what the new era funds of funds will look like, and the investments they will target.’

– Ends –

For further information, please contact: 
Johlyn da Prato, johlyn.da.prato@inrev.org | +31(0) 621397456
Justin St Clair-Charles, inrevteam@firstlightpr.com | +44 (0) 7769 644 059
Josie Workman / Ellie Rust, inrevteam@firstlightpr.com | +44 (0) 7460 325 392

Notes to Editors

About the Funds of Funds Study 2021
The Fund of Funds Study provides insights on performance, target region, style, structure and other characteristics. The study was a joint initiative between INREV in Europe and ANREV in Asia Pacific.

The study includes responses from the combined INREV and ANREV fund of funds Universe of 23 vehicles with a total NAV of €21.0 billion.  However, performance figures are based on a reduced sample of 19 funds of funds with a total NAV of €20.5 billion, which is 97% of the total value of the universe.
Sample size for the study varies year-on-year so historical comparisons should be treated with caution.  

INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, was launched in May 2003 as a forum for investors and other participants in the growing non-listed real estate vehicles sector. The association represents and reflects an industry with a total value of €3.3 trillion and INREV members deliver €385 billion of stimulus to the real economy of Europe. 

INREV has 453 members which include 91 of the largest institutional investors as well as 40 of the 50 largest real estate fund managers, plus banks and advisors across Europe and elsewhere. 

The non-profit association is focused on increasing the transparency and accessibility of non-listed vehicles, promoting professionalism and best practice, and sharing knowledge. It is based in Amsterdam, the Netherlands.  

ANREV is the Asian Association for Investors in Non-Listed Real Estate Vehicles, a not-for-profit organisation based in Hong Kong. ANREV's agenda is driven by the members, in particular the investors, and is focused on improving transparency and accessibility of market information, promoting professionalism and best practices, sharing, and spreading knowledge. Fund managers, investment banks, lawyers and other advisors provide support in addressing key issues facing the Asian non-listed private equity real estate fund markets. 

ANREV is part of a global alliance together with the European Association for Investors in Non-Listed Real Estate Vehicles (INREV) and the National Council of Real Estate Investment Fiduciaries (NCREIF), which works with the other regional associations to advance the global agenda of transparency, accessibility and professionalism and increased harmonisation across the non-listed real estate industry.