Open-end Diversified Core Equity Funds Quarterly Performance at March 31, 2020 was below 1% for the first time since first quarter of 2010
CHICAGO, IL, April 30, 2020 – The National Council of Real Estate Investment Fiduciaries (NCREIF) released first quarter 2020 results for the NCREIF Fund Index – Open‐end Diversified Core Equity (NFI-ODCE). The NFI-ODCE consists of 24 funds, totaling $264.4 billion of gross real estate assets and $222.8 billion of net real estate assets.
NFI-ODCE total return gross of fees for the first quarter 2020 was 0.98%, down from 1.51% in the fourth quarter 2019, and down from 1.42% a year ago in the first quarter 2019. The income return for the quarter was 1.02%, down 0.02% from the previous quarter, and well below the ten and twenty-year quarterly averages of 1.21% and 1.43%, respectively. The appreciation return decreased to -0.04% for the quarter, below the previous quarter’s 0.47%, and down -0.44% from the first quarter 2019.
Quarterly NFI-ODCE Gross Return Trends
For the one-year ended March 31, 2020, the NFI-ODCE total return gross of fees was 4.88%, down from 7.52% for the one-year ended March 31, 2019 and well below the annualized since inception return of 8.60%. The one-year total return ended March 31, 2020 was comprised of 4.18% income and 0.67% appreciation returns.
NFI-ODCE returns measure fund-level performance and therefore can reflect leverage and other investments beyond properties, including cash balances. Leverage is conservative among these funds given their core strategies, ranging from 15% to 34% over the quarterly series history beginning in 2000. NFI-ODCE leverage is slightly above the 21.8% average since 2000, registering 21.9% as of the end of first quarter 2020, up from 21.5% in the previous quarter.
NFI-ODCE Leverage Trends (% of total assets)
Quarterly NFI-ODCE investor net cash flows were negative $220.2 million, compared to last quarter’s positive $2.5 million, and first quarter 2019’s negative $904.6 billion. For the one-year ended March 31, 2020, contributions were $17.9 billion and distributions/redemptions were $19.1 billion, resulting in an annual investor net cash flow of negative $1.2 billion.
NFI-ODCE Investor Cash Flow Trends (4Q Rolling Total, Billions)
Additional details from the NFI-ODCE release are in the attached Snapshot Report.