IIJournals JPM-Special Real Estate Article Collection | Page 26

both.2 Here, we observe substantial differences between
US funds and their foreign peers. Panel A of Exhibit 6
shows the percentage of pension funds that invest in
real estate through internal management. This appears
to be quite exceptional in the United States, as only
about 10% of funds invest internally. That percentage
is quite stable over time, reaching 15% at most, in 2002
and 2003. Among pension funds outside of the United
States, internal real estate asset management is much

more common, with around 40% of funds choosing
this approach.
Of course, this implies that almost all US pension
funds that invest in real estate retain external managers:
Consistently 95% of US pension funds have externally
managed real estate portfolios, implying that even if
these funds partly manage their real estate portfolio
internally, they may still hire an external manager to
look after the remainder of the real estate investments.

EXHIBIT 6
Percentage of Pension Funds Investing Internally and Externally in Real Estate

SPECIAL R EAL ESTATE ISSUE 2013

JPM-ANDONOV.indd 37

THE JOURNAL OF PORTFOLIO M ANAGEMENT

37

9/17/13 9:09:03 PM