Benefits of Open Architecture and Multi-Management in Real Estate Markets-Evidence from French Nonlisted Investment Trusts

摘要

Using a unique dataset of Societes Civiles de Placement Immobilier (SCPIs), the authors provide evidence that the French nonlisted real estate investment funds market exhibits a substantial level of dispersion in risk and return characteristics. The authors find several attributes to have meaningful explanatory power with respect to such differences in risk and performance. They also find that portfolios of nonlisted real estate investment funds exhibit a substantially lower level of volatility than the average fund in the panel and that 15 SCPIs are enough to capture over 90% of these diversification benefits. Taken together, these results suggest that substantial value can be added by selection and allocation decisions, which could form the basis for a welfare-enhancing open architecture multi-management approach to investment in unlisted real estate investment trusts.