Seeks Consistent Returns Backed by Steady Income
In a world of increasing uncertainty, stability can be a valuable asset.
For more than 45 years, private core real estate has generated steady cash flows derived from 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 stable. 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 NFI-ODCE Index over time.1
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 steady income over time.
NFI-ODCE Income and Total Returns
|1-Year||3-Year||5-Year||10-Year||39 Years (Inception)|
Balanced Risk vs. Returns2
Private core real estate has delivered better returns with less risk than other major asset classes.
20 Years Ended December 31, 2016
20 Years Ended December 31, 2016
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 (‘beta’) strategy which is designed to represent the characteristics of the NFI-ODCE Index. 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 ODCE Index 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.
Core Real Estate Has Low Correlation to Equities and Bonds
20 years ended 12/31/2016.
No amount of diversification or correlation can ensure profits or prevent losses.
A low-cost, passive (‘beta’) 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 stable 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 gross total expense ratio is 3.63% as stated in the fee table of the September 1, 2017 prospectus. This represents the annualized ratio of expenses to average net assets before reimbursement for the initial fiscal year ended April 30, 2017. 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 expenses of the Fund until at least August 31, 2018 to the extent that they exceed 1.20% per annum of the Fund’s average daily net assets.
1 NCREIF Fund Index – Open End Diversified Core Equity is an index of investment returns reporting on both a historical and current basis the results of 36 open-end commingled funds pursuing a diversified core investment strategy. The Fund 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 Index 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 Index and all its guidelines.
2 Source: Bloomberg and NCREIF. Commercial real estate is represented by the NCREIF Open-End Diversified Core (ODCE) Index, an index of investment returns reporting on both a historical and current basis the results of 36 open-end commingled funds pursuing a diversified core investment strategy. See ncreif.org for more information on the NFI-ODCE Index and its guidelines. Equities are represented by the S&P 500 Index, an unmanaged index of the 500 largest stocks (in terms of market value), weighted by market capitalization and considered representative of the broad stock market. Bonds are represented by the Barclays Capital 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. 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.