AMP is pulling off the highest returns in the Australian hybrid property fund market according to research house Managed Investment Assessments (MIA).
AMP's Capital Core Property Fund had almost a 30 per cent pre-tax return (net of fees) in the 12 months ending 31 December 2006.
Macquarie Bank's Direct Property Fund came a close second at 29 per cent return, followed by Perpetual's Property Income Fund at 24 per cent.
The hybrid property sector has grown 400 per cent in the past two years and now has $6.06 billion in funds driven by demand for liquidity and a platform-friendly structure, MIA director Anton Lawrence said.
The listed property trust sector has tightened over the past 12 months and many of the larger index stocks now provide less than 6 per cent income based on their market price, Lawrence warned.
"Until recently this would have significantly diluted returns as the yield gap was in excess of 150 basis points and often more than 200 basis points," he said.
"However, the yield gap between listed and unlisted property continues to decline to the extent that the 'premium' paid for liquidity via listed property trusts is now less than 100 basis points for most types of direct property."
MIA said a new generation of funds - those managed by APN, AMP, Centro, Macquarie, Multiplex and Perpetual - have lower liquidity levels and may split listed property between domestic and global securities, as is the case with AMP.
"New generation hybrid funds are in some cases offering retail investors access to underlying investments that were previously only accessible to institutional investors," Lawrence said.
Hybrid property funds usually contain a blend of investment categories, property types and geographical distribution.
