In the second quarter of 2024, global real estate investment trusts (REITs) traded down more than 2%, as investors worried about the pace of interest rate cuts in the midst of a relatively strong economy and somewhat sticky inflation. On a U.S. dollar basis, all regions experienced flat to negative nominal returns, with Asia lagging, down approximately 8%. Asia's real estate returns were weighed down by Japan's, which were more than 12% due to currency depreciation and some profit taking after a strong first quarter.
Relative performance versus benchmark was positive for the quarter. We generated alpha through stock selection within global data centers—a timely conviction underweight on U.S. industrial. We also added alpha in Canada and Australia for the quarter.
An underweight on U.S. apartments and stock selection in healthcare were detractors from performance in the portfolio, as was self-storage in Belgium.