Listed property investments continue to thrive on the back of falling interest rates, according to research from Morningstar.
In Morningstar's managed fund performance league tables for the fourth quarter of 2012, Australian real estate investment trusts (REITs) gained 6.95 per cent in the three months to 31 December 2012 and ended the full year with a 32.79 per cent gain.
Australian REITs posted the best quarterly return of the major asset classes. "This was easily the best-performing major asset class, driven largely by investor's thirst for income in a falling interest rate environment," the report stated.
Value-style fund managers did best on average among both large-cap Australian share funds and small-cap categories over the December quarter.
In the Australian smaller companies category, value-style options recorded a 6.10 per cent quarterly return, outperforming the S&P/ASX Small Ordinaries Index, which recorded 2.04 per cent.
The best preforming small-cap funds were OC Dynamic Equity and Smallco Investment.
"Market conditions meant that value-style share funds did best over the December quarter," Morningstar senior research analyst Julian Robertson said.
"Growth assets enjoyed a healthy Christmas rally and closed out the year on a resoundingly strong note."
Australian fixed income funds with tilts to credit had favourable returns due to the on-risk market environment.
Global fixed interest funds saw similar trends with credit-related securities and emerging market debt recording the strongest returns.
"Among fixed income funds, credit and emerging market exposures did particularly well, reflecting the more benign investment backdrop in the final quarter of the year," Mr Robertson said.
