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Unlisted property an alternative to cash

Advisers should make allocations to unlisted property rather than cash or fixed income since it provides lower volatility and higher returns, says Australian Unity. 

Speaking at the Australian Unity Property Roadshow, Australian Unity head of portfolio management Ryan Banting said a 25-year analysis of the income returns of the main asset classes demonstrates unlisted property “has a lower level of volatility than cash”.

Mr Banting said the analysis also showed unlisted property had a higher level of return compared with most other investments.

“There’s been a flight to safety in the last few years – that safety has generally come from fixed income, term deposits or other cash like investments,” he said.

“What you’ve been able to get above cash through unlisted property is about 300, potentially 350 basis points of outperformance from an income perspective – this is from an investment that’s likely to give you no greater volatility than what you’re going to get from cash.”

Mr Banting also stressed the fact that unlisted property is not exposed to equity market beta like Australian real estate investment trusts, which also makes it a less volatile investment.