Global Mandate In Case Of Property Investments

A global mandate is what investment managers for bonds and stocks have seen as a major trend of investment style among pension funds. Certainly, a gobal mandate approach has a merit. In portfolio construction, the wider the index coverage is, the better the risk-return profile is because it is more diversified. On top that, as long as the Japanese equity investment is concerned as a signle country mandate, it looks like the Japan is lack of upside potential as compared with China and India. That's why a portfolio construction nowadays is going global. Global equity and bond mandates are booming relative to a single country manadte or a regional mandate. In fact, a Japanese equity mandate has only 0.5% of breakdown in the US instituional equity manadtes, while a global equity mandate shows [20]%.

How about a proprty investment? Certainly, we have seen a global real estate private equity products and global REIT mandate so far. Goldman's Whitehall Fund is one of good examples and they have looked for a global opportunit  to invest properties which produce a return of double digit percentatge after the leverage. However, such a global player is limited and decreseing in number under the current market conditions. Surely, the size of property investment per trade is big; therefore, a global portfolio construction is challenging. That's why a country and sector allocation is fairly important. I have got know the reason many Japanese property managers have difficulty rasing equities for their planned Japanese office or residential funds. It is primarily because the demand for Japanese properties is not so strong as they expected. Moving global or demonstrate the relative attractiveness of Japanese properties in a clear way looks like a solution.