Funds of funds delivered a record 18.7% total annual return last year, according to INREV.
The industry body鈥檚 Fund of Funds study for 2016, jointly published by INREV and ANREV, found that returns were almost double INREV鈥檚 of 9.7%.
The return comes despite that funds of funds were investors鈥� least preferred option for capital allocation to real estate.
Henri Vuong, INREV鈥檚 director of research and market information, said 鈥渟ubtle changes in scale and structure suggest greater alignment between investors and fund managers鈥�.
She added: 鈥淭his is all reflective of a general market sentiment that鈥檚 tilting more and more toward increased control of risk and greater transparency.
鈥淚t鈥檚 a mood that will only intensify in the continuing climate of economic and political uncertainty.鈥�
The return is the highest since before the financial crisis and up from 8% in 2014.
Though performance was not equal across vehicle size, geographic region, style, structure or vintage, there was a consistent improvement in performance for virtually all types of funds of funds, the study found.
Large vehicles, with NAV in excess of 鈧�300m, returned 22.1%, while core funds returned 20.4%.
The study found that open-ended funds returned 19.4%, and that funds following a global strategy returned 26%.
Core vehicles made up most of the combined INREV and ANREV universe, representing 71.8% of the total NAV for funds of funds.
