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NPS Develops World’s First Specialty Property Index
Date : 2023/05/08
Hit : 485
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NPS Develops World's First Speciality Property Index - In collaboration with FTSE Russell, the NPS has created an index for niche and non-core real estate sectors - - The index launch will unlock investments in speciality sector opportunities such as data center, senior care and timber. -
□ The National Pension Service of the Republic of Korea (NPS) has developed the world’s first index for niche and non-core real estate sectors, opening up new investment opportunities in the real estate market. ○ The National Pension Service Investment Management (NPSIM; Chief Investment Officer, Seo Won-joo) said on May 2, 2023 that together with FTSE Russell, a subsidiary of the London Stock Exchange Group, the NPS created the ‘FTSE EPRA Nareit Developed Extended Opportunities RIC 6/45 Capped Index’ in November 2022, and has since utilized it as a global benchmark. □ This newly launched index is designed to complement a real estate portfolio predominantly composed of traditional property types such as offices and retail. ○ The index extends beyond core real estate property sectors, and additional securities broaden inclusion further than the FTSE EPRA Nareit Developed Indexes. ○ It is currently being offered to various investors in the real estate market, alongside the NPS. □ The distinct feature of the index is that it focuses solely on niche and non-core property sectors*, exclusive of traditional sectors of real estate.
* Including data center, self-storage, senior care, life science, timber, single family, manufactured homes, medical office building, student housing, etc. ○ Given that they have greater potential to grow than traditional sectors and low correlation with the economic cycle, niche and non-core real estate markets are viewed as new attractive investment opportunities. ○ Despite the high interest and demand for the specific sector exposures, investments have not been active enough due to the absence of relevant benchmark solutions. □ Against the backdrop, the NPS engaged with FTSE Russell to develop an index for niche non-core property exposure sectors. As a consequence, the new index was launched in November 2022, and has since been added to FTSE Russell’s standard index series. ○ The index solution enables market participants to gain exposure to niche and non-core real estate sectors and track the market performance. ○ Kim Joo-seong, senior portfolio manager who took the lead in creating the index at the NPS, said: “The increasing demand for investing in niche and non-core property sectors led us to initiate the discussion of the development of the benchmark index to define the sectors and evaluate the market performance.” □ It is expected that the index will assist the NPS in taking the first mover advantage in the market and enhancing return prospects. ○ The index will be used by the NPS as part of its portfolio completion strategy, with a total of $1 billion assets under management allocated. ○ The index currently has 70 constituents across ten countries, including the United States, the United Kingdom, Australia, Belgium, Canada and Singapore, and had a dividend yield of 4.05%* as of March 31, 2023. □ Seo Won-joo, CIO of the NPS, said: “This new index will play a key role in diversifying our real estate portfolio.” ○ “The index not only provides immediate access to a broader set of specialty sector opportunities but will also greatly enhance the risk-adjusted return of the entire portfolio in the long run.” |
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| Attached file | [Press Releases] NPS Develops World’s First Specialty Property Index.pdf | ||||
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