American Century Takes Real Estate Global08.02.2011
Since 1958, Kansas City-based mutual fund conglomerate American Century has developed a well-penetrated mutual fund business, serving investors worldwide. The firm currently has north of 85 billion under management.
The firm announced on August 1, the launch of its first-ever American Century Global Real Estate fund.
“We thought there was a strong demand for a global real estate product, both from the institutional and retail/financial intermediary side,” said Steven Brown, senior portfolio manager at American Century. Brown will manage the new fund. Prior to the launch, American Century offered only a U.S. real estate fund, noted Brown.
“In the last five years, we have seen a shift in preference to global investing as clients seek higher returns and ways to possibly reduce the impact of inflation,” said Brown in a statement.
The new Global Real Estate Fund will invest in publicly traded commercial real estate companies, to keep the portfolio “liquid,” as well as commercial real estate investment trusts (REITs). Globally, the fund will consist of approximately 41 percent of U.S. holdings, 22 percent Asia ex- Japan, 10 percent Japan, seven percent Australia, and 12 percent the U.K./Europe and various other emerging markets.
“Real estate fits in with an institutional asset allocation model—it provides diversification,” Brown told Markets Media. “It’s an income producer, and it’s different from stocks, and bonds in the fact that there’s a long duration, lowly correlated to other assets.” Brown also cited the “good total return” of real estate funds, in the past year.
“Over the last 12 months, we have really seen commercial real estate improving,” Brown said.
American Century’s Global Real Estate seeks to outperform the MSCI AC World IMI Real Estate Index with lower volatility over a full market cycle.