2. What factors would you consider when structuring an investment strategy using listed and unlisted vehicles?

• Consider:

  • Return target: income vs growth

  • Risk appetite: core vs opportunistic

  • Time horizon: long vs short-term

  • Liquidity: daily dealing vs long lock-up

  • Regulation: Solvency II, fair value rules (for example, insurers may face capital treatment under Solvency II, which affects allocations to higher-risk vehicles.)

• Tailor mix of listed/unlisted vehicles

Listed Vehicles (e.g. REITs, Listed Property Companies)

• Advantages:

  • Daily liquidity and transparent pricing.

  • Benchmarkable (e.g. FTSE EPRA NAREIT indices).

  • Easier diversification across sectors/regions.

  • Suitable for tactical asset allocation and shorter-term mandates

• Risks:

  • Higher volatility and equity market correlation.

  • Share price reflects sentiment, not underlying asset value.

  • Potential NAV discount/premium can distort real estate fundamentals. Especially during market stress (Covid, many REIT’s high discounts)

Unlisted Vehicles (e.g. Core Funds, Value Add Funds)

• Advantages:

  • Access to specific strategies (e.g. urban logistics, refurbishments).

  • Greater control (e.g. governance rights in club deals).

  • Lower short-term volatility.

• Risks:

  • Illiquidity and valuation lag.

  • Higher fees and complex structures.

  • Complexity in vehicle governance and reporting.

  • Unlisted funds also expose investors to liquidity risk, as seen in the UK’s open-ended retail funds, which suspended redemptions in 2016 and 2020 due to NAV mismatches.

Strategic Allocation

• Blended allocation (e.g. 70% unlisted, 30% listed)

• Diversification: region, sector, vintage

• Scenario modelling: interest rates, downturns, refinancing stress

• Governance/cost: alignment via co-investment, assess fee layers

5. Vehicle-Strategy Fit

• Match:

  • Opportunistic → closed-end

  • Core/income → open-end or REIT

• Avoid mismatch:

  • Development in open-end → redemption risk

  • Listed income REITs exposed to market pricing volatility