Seeks Total Returns Backed by Consistent Income
In a world of increasing uncertainty, stability can be a valuable asset.
For more than 40 years, private core real estate has generated steady cash flows derived from the income of the properties held by institutional funds. Because the target funds are permitted to invest only in institutional-quality properties in major markets, income has tended to be relatively consistent. In a growing economy, income may increase as occupancy levels and lease levels climb; but in a weakening economy, income levels may fall. The chart below shows the income returns of the NCREIF Fund Index – Open End Diversified Core Equity (“NFI-ODCE”)1 over time.
The index performance is shown for general market comparisons and is not meant to represent the PREDEX Fund. Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance does not guarantee future results. For PREDEX Fund performance information, please call 1.877.940.7202.
Private Core Real Estate Total Returns
The asset class has generated strong total returns with consistent income over time.
NFI-ODCE Income and Total Returns
Balanced Risk vs. Returns2
Private core real estate has delivered relatively high risk-adjusted returns compared to other major asset classes.
Comparisons of different asset classes and indexes have limitations and other material characteristics that may differ from each other. Some of those differences include the investment objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, or tax features.
PREDEX vs. Other Real Estate Alternatives
PREDEX invests in core real estate, which typically includes institutional-quality properties which may have less debt than other more speculative real estate investments. PREDEX utilizes a low-cost, passive strategy which is designed to represent the characteristics of the NFI-ODCE. This approach enables PREDEX to offer a fee structure which is attractive relative to funds which are actively managed with a broader mandate to invest in the “four quadrants” of real estate investing (private, public, debt, equity).
Filling a Void in Investor Portfolios
For years, institutional investors have looked to private core real estate for income and diversification.
Since the inception of the NFI-ODCE in 1978, private core real estate has had a low correlation to the U.S. bond market. Private core real estate also has a low correlation to equities, meaning it is less influenced by stock market volatility. We believe these characteristics make PREDEX a potentially valuable option for reducing portfolio risk.
Private Core Real Estate Has Low Correlation to Equities and Bonds
20 years of quarterly data ended 12/31/2021.
No amount of diversification or correlation can ensure profits or prevent losses.
A low-cost, passive strategy offers competitive fees for our investors:
Annual asset management fee: 0.55%
PREDEX is a low-cost, core real estate strategy which provides the potential for consistent income, low correlation to other assets and relatively low volatility. By investing in a more passively managed strategy, PREDEX investors avoid the higher fees often associated with active management. The Summary of Fund Expenses in the prospectus dated September 1, 2021, reports that investors may pay total annual expenses of 1.36%, 1.76% and 1.77% per annum as a percentage of net assets attributable to shares of Class I, Class T and Class W, respectively. The Adviser and the Fund have entered into an Expense Limitation Agreement under which the Adviser has agreed contractually to waive its fees and to pay or absorb the ordinary operating expenses (excluding interest and extraordinary expenses, if any) of the Fund until at least August 31, 2022 to the extent that they exceed 1.10%, 1.35% and 1.35% per annum for Class I, Class T and Class W, respectively.
1 NCREIF Fund Index – Open End Diversified Core Equity (NFI-ODCE) is an index of investment returns reporting on both a historical and current basis the results of 41 open-end commingled funds pursuing a diversified core investment strategy. The Fund typically invests up to 95% of its total assets in Institutional Private Funds under normal circumstances. Some Institutional Private Funds are included in the NFI-ODCE. Under normal market conditions, the Fund invests at least 50% of its Institutional Private Fund assets in Index-members. The NFI-ODCE is not a mutual fund and would not be considered diversified under the 1940 Act. See ncreif.org for more information on the NFI-ODCE and all its guidelines.
2 Source: Bloomberg and NCREIF. Private Real Estate is represented by the NCREIF Fund Index – Open End Diversified Core Equity (NFI-ODCE), an index of investment returns reporting on both a historical and current basis the results of 41 open-end commingled funds pursuing a diversified core investment strategy. See ncreif.org for more information on the NFI-ODCE and its guidelines. Bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index, an index of securities that are SEC-registered, taxable and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. The S&P 500 Index is an unmanaged index of the 500 largest stocks (in terms of market value), weighted by market capitalization and considered representative of the broad U.S. stock market. The Russell 2000 Index is an unmanaged index of the smallest 2,000 stocks (based on capitalization) in the Russell 3000 Index and considered representative of U.S. small-cap stocks. Equity REITs are represented by the MSCI US REIT Index, a free float-adjusted, market capitalization-weighted index of publicly listed U.S. Equity REITs not designated as Mortgage REITs or selected Specialized REITs. Total returns presented assume reinvestment of distributions. Investors are not able to invest directly in the indices referenced in this illustration and unmanaged index returns do not reflect any fees, expenses or sales charges. The referenced indices are shown for general market comparisons and not meant to represent the Fund. Past performance does not guarantee future results.