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Friday, January 26 2007 @ 09:34 AM Central Standard Time
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Standard & Poor (S&P) launched Wednesday, the S&P Global Property 40 index to bring about real estate liquidity among property investors.
The index includes up to 40 leading, publicly traded global real estate companies from the regions of Europe, Asia Pacific and the Americas which are presently traded on the developed market exchanges.
To maintain regional balance, each region will have a minimum of five or maximum of 20 companies represented in the index. Annual adjustment is part of the set up to find balance against fluctuations, according to Skikant Dash, an S&P index strategist.
Dash said no other index or fund has the variety of regions and the liquidity Global 40 has. It has at present 39 listed companies having the U.S. as the dominant region weighing at 23.6%, which includes Vornado Realty Trust f New York City and REIT ProLogis of Denver. Japanese companies comprise 22.4% with Mitsubishi Estate has having the index’s biggest holding. All companies have a total market cap about $1 billion and a 3-month average daily value traded above the liquidity threshold of $3 million.
Sonja Morris, a Morningstar mutual fund analyst, said the index might become an exchange traded fund (ETF) as it has already gained ground after the first fund to monitor publicly traded global real estate was rolled out in December (SPDR DJ Wilshire International Real Estate).
"There's definitely interest in the market for international funds," Morris said
Morris cautions investors of overheating of foreign real estate market, like the U.S. They should “look for low costs, broad diversification and low turnover for tax efficiency,” he said.
Ma. Roma C. Agsalud
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