In addition to factor research of listed global real estate securities markets, Kania Advisors is expanding its coverage to include listed infrastructure and agriculture sectors. The company will also provide both specific structural factor data as well as factors based on machine learning processes applied to market data.

Generally, active managers have continued to improve active profile, the overall active share for the sector as of H2 2018 stands at 56% compared to 52% in H2 2017. There has also been a meaningful improvement in active share of large-caps, a segment that historically had low active share utilization. On the other hand, there has been an increase in portfolio concentration in less liquid small-caps.

Residential bridge and development finance can be an attractive allocation for institutional investors, however lack of standardized market data and information add a level of complexity in evaluating these strategies. New data sources and big data analytics can close the information gap for these new and increasingly important allocations through specific risk and rating methodologies. Implementing these new tools and technology can provide vital quantifiable risk metrics and profiles, can improve decision making processes at the outset and provide near real-time risk management tools for ongoing portfolio monitoring.

Kania Advisors alternative beta indices for global real estate securities now available through Quantilia.

In today's highly competitive markets every basis point of performance or cost reduction counts and investors are taking action to eliminate inefficiencies. For active managers it may be a critical time to address key issues which contribute to such inefficiencies. Otherwise, there is a real possibility that active management in the sector could become marginalized as a result of not delivering value. Some of the answers could lie in increased reliance on quantitative solutions to improve information flow, analytics, decision making and ultimately performance.

This note summarizes current state of active profile in actively managed global real estate securities funds, as of Q4 2017. Active profile presented here relates to active share and the composition and distribution of total active share for the sector. 

Kania Advisors Global Real Estate CAI Index (CAI Index) outperformed ca 93% of comparable actively managed funds in 2017.

Active managers are increasingly considering possible complementary options which would result in a better value proposition and improved portfolio outcomes, as long as on balance those options do not change their fundamental process. Factors can be one such complementary option.

The first and most important property of constructing an investment portfolio is diversification. One such dimension of diversification that may be relevant to evaluate is the correlation of active positions relative to the benchmark against which an allocation is constructed.