The best-performing funds in the AREF/IPD UK Quarterly Property Fund Index have notched up strong double-digit total returns for 2017.

In the all-balanced index, the top-performing fund was the AEW UK Core Property Fund, which delivered returns of 15.2%. It is also the best-performing fund over three years and five years. 

AEW UK managing director Richard Tanner said the fund’s focus on smaller lots in good locations had proved successful.

“It’s been a good wicket for us to play on,” he said, adding that it is out of the way of global investors looking for very large lots and UK institutions focused on long inflation-linked income.

James Thornton, chief executive of Mayfair Capital, whose Property Income Trust for Charities was the fifth-best performer in the all-balanced index and the best-performing fund for the charity sector, said it had benefited from a decision to sell its London holdings before the EU referendum and re-invest in the regions.

“We felt London was close to its cyclical high – taking profit and recycling was a sensible thing to do,” he said.

Specialist funds

In the specialist fund index, fund performance varied significantly in 2017, reflecting the sharply contrasting fortunes of different sectors.  

The best-performing fund was the Industrial Property Investment Fund, which delivered returns of 25.4%. The two weakest-performing funds, TH Real Estate UK Shopping Centre Fund and the Lend Lease Retail Partnership, posted marginally negative returns.

Meanwhile, in the long-income index, PGIM Real Estate UK Ground Lease Fund was the top performer, posting returns of 16%. The funds in the index also experienced significant inflows, with the Standard Life Investments Long Lease Property Fund growing from £1.74bn at the end of 2016 to £2.13bn and the M&G Secured Property Income Fund growing from £3.27bn to £3.72bn.

The average return from the all-balanced index was 10.2% while the average for the long-income index was 10.5% and for the specialist fund index it was 8.1%.