Consistency, consistency, consistency in REITs alpha generation
The Kania Global Real Estate CAI Index has generated significant and consistent outperformance to benchmark throughout changing market conditions.
The Kania Global Real Estate CAI Index, an alternative beta index based on factors relevant to real estate and real estate securities and not general equity market factors, has generated significant and consistent live outperformance to benchmark of approximately +450bps per annum, consistently over 1-, 3- and 5-year periods.
Importantly, positive outperformance was and continues to be generated throughout both changing and volatile market conditions in each phase that markets have been subject to over the past 5 years;
pre-COVID,
during COVID downturn,
during post-COVID recovery; and
during the interest rate hiking period
This consistent outperformance in each separate phase is despite the fact that the index rebalancing schedule is fixed (semi-annual) and not timed to market dynamics, i.e. the index does not rebalance when there is actual or perceived change in equity market conditions. Further, the index is structured to provide full alpha generating capacity of the underlying benchmark (this is achieved through a consistent 50% active share at each rebalancing), and therefore seeks to harvest an optimal magnitude of alpha irrespective of equity market conditions and to do so with a conservative risk profile.
This live outperformance profile, magnitude and consistency, highlight the importance of structuring processes and allocations that provide exposure to factors that are fundamentally relevant to real estate and real estate securities markets in a repeatable, consistent way and at the same time eliminating noise and extrapolating anecdotal data and information across diversified portfolios.
For further information about the index and factors, please contact info@kaniaadvisors.com.
About Kania Advisors
Kania Advisors is an independent research and advisory firm focused exclusively on institutional real assets allocations and investment programmes. We provide advice and solutions to improve outcomes in real assets investment programmes. We conduct detailed industry research and custom studies typically focused on quantitative analysis and provide insights which form a critical part of a client's decision process.