Hsu Wen Peng

The Significance of Infrastructure in Australian Investment Portfolios

Abstract Infrastructure has taken on increased investment importance in recent years with the growth in listed and unlisted infrastructure funds, and increased interest in infrastructure as an asset class by superannuation funds. In addition to the traditional listed infrastructure companies, a number of major institutional investors in Australia have become increasingly involved in infrastructure funds; this includes Macquarie, AMP, Babcock and Brown, Hastings and James Fielding. The purpose of this paper is to assess the significance of these infrastructure funds in Australia; particularly highlighting the leading infrastructure funds, types of infrastructure investment and superannuation fund investment in infrastructure. The investment characteristics and performance of infrastructure over 1995-2006 will also be assessed, as well as the potential role of infrastructure in portfolios. Strong performance has been shown by the infrastructure sectors, as well as providing diversification benefits in a portfolio; with infrastructure volatility having reduced in more recent years as the sector has matured.

The performance of unlisted infrastructure in investment portfolios

Unlisted infrastructure funds have taken on increased importance in recent years with institutional investors, as well as unlisted infrastructure becoming a key asset class for pension funds and sovereign wealth funds. This paper assesses the significance and performance of unlisted infrastructure in Australia over Q3:1995–Q2:2009 by utilising a unique unlisted infrastructure performance series. Unlisted infrastructure is seen to be a strongly performed asset class on a risk‐adjusted basis, as well as providing significant portfolio diversification benefits and displaying different investment characteristics to listed infrastructure. Unlisted infrastructure performance was seen to be robust during the global financial crisis (GFC) for both risk‐adjusted performance and portfolio diversification benefits; particularly in comparison with listed infrastructure and the other listed assets. Issues regarding the future strategic development of unlisted infrastructure as an effective asset class are also identified.

The impact of the global financial crisis on A-REITs

Abstract A-REITs have previously been highly successful indirect property investment vehicles in Australia. However, the global financial crisis has had a significant impact on the performance of A-REITs in 2007-09. This has seen the factors of international property exposure, high debt levels and stapled securities structures having an impact on A-REIT performance. This paper assesses the changing risk profile and portfolio diversification benefits of A-REITs over 1996-2008, specifically identifying the impact of international property, high gearing and property development activities on the performance and risk profile of A-REITs in the current global credit crisis. The impact of high gearing is seen to be the most critical factor in recent A-REIT under-performance.

The significance of emerging property sectors in property portfolios

Abstract Property funds in Australia have over

The significance and performance of Japan REITs in a mixed-asset portfolio

160 billion in assets, with office, retail and industrial property being the major property sectors contributing to these property portfolios. However, recent years have seen increased attention given to the property investment opportunities available from the emerging property sectors such as self-storage, healthcare, retirement facilities and leisure/entertainment. This paper will assess the significance of these emerging property sectors in property portfolios in Australia; particularly highlighting issues such as the current portfolio levels and the leading property funds in these emerging property sectors. An emerging sector LPT performance index is established and an emerging property sector risk-adjusted performance analysis carried out over 2002-2005, as well as the portfolio diversification benefits of the emerging property sector assessed. Compared to the other LPT sectors, the emerging sector LPTs were seen to provide superior risk-adjusted performance, as well as providing portfolio diversification benefits.

LPT Fund Manager Decision-Making in the Emerging Property Sectors

Abstract REITs in Japan (J-REITs) are the largest REIT market in Asia and the 5th largest REIT market globally. To examine the attractiveness of J-REITs for investors, this paper assesses the significance, risk-adjusted performance and portfolio diversification benefits of J-REITs in a mixed-asset portfolio context in Japan over 2001-2011. Amongst the major asset classes, J-REITs delivered the best risk-adjusted returns and portfolio diversification benefits over 2001-2011, with enhanced risk-adjusted returns in the post-GFC period. Key strategic issues for the ongoing development of the J-REIT market are also identified.

The role of Taiwan REITs in investment portfolios

Abstract In recent years, the emerging property sectors, including retirement, healthcare, leisure and childcare, have taken on increased importance for institutional investors. This paper assesses the increasing significance of emerging property sector funds in Australia and the investment decision-making by emerging property sector LPT fund managers. Motivating factors and risk factors are identified; as well as the processes involved in selecting a suitable business partner, given the operating business element involved with these emerging sector property assets. The ongoing future development of the emerging property sectors is also identified and discussed.

ASSESSING THE LINKAGES BETWEEN CORPORATE SOCIAL RESPONSIBILITY AND A-REIT PERFORMANCE

Abstract REITs in Taiwan (T-REITs) have been an important property investment vehicle in Taiwan since 2005. This paper assess the significance, risk-adjusted performance and portfolio diversification benefits of T-REITs in a mixed-asset portfolio in Taiwan over 2005-2011. Whilst T-REITs under-performed the construction shares sector in Taiwan, they provided portfolio diversification benefits, with enhanced risk-adjusted returns, enhanced diversification benefits and a significant role in the mixed-asset portfolio in the post-GFC period. The key strategic issues for the ongoing strategic development of the T-REIT market are identified; particularly relating to the size and growth opportunities for T-REITs.

Assessing the Significance of Motivating Factors and Risk Factors in Infrastructure Funds Management

Abstract Corporate social responsibility (CSR) has taken on increased significance in the property sector in recent years. This paper assesses the level of CSR practices by A-REITs across the environmental, social and governance dimensions of CSR and compares this to other ASX sectors. A number of unique CSR A-REIT performance indices are developed for A-REIT investors committed to the principles of CSR, and their added-value assessed via risk-adjusted performance analysis and their portfolio diversification benefits. Importantly, these CSR A-REIT indices do not significantly under-perform the conventional A-REIT indices, as well as providing portfolio diversification benefits. The CSR A-REIT investment implications are also highlighted.

The role of U.S. infrastructure in investment portfolios

Abstract Infrastructure, including tollroads, airports and utilities, has taken on increased importance for institutional investors in recent years. This paper assesses the increasing significance of infrastructure funds in Australia and identifies the importance of the motivating factors and risk factors for infrastructure fund managers. The ongoing future development of the infrastructure sector in the context of the current global credit crisis is also identified and discussed.