The significance and performance of French REITs (SIICs) in a mixed‐asset portfolio
| Pages | 575-588 |
| DOI | https://doi.org/10.1108/JPIF-01-2011-0004 |
| Date | 20 September 2013 |
| Published date | 20 September 2013 |
| Author | Graeme Newell,Alastair Adair,Thi Kim Nguyen |
| Subject Matter | Property management & built environment |
ACADEMIC PAPER
The significance and performance
of French REITs (SIICs)
in a mixed-asset portfolio
Graeme Newell
School of Business, University of Western Sydney, Penrith, Australia
Alastair Adair
University of Ulster, Newtownabbey, Northern Ireland, and
Thi Kim Nguyen
School of Business, University of Western Sydney, Penrith, Australia
Abstract
Purpose – REITs have taken on increased significance in Europe in recent years, with French REITs
(Societe d’Investissement Immobilier Cotee (SIICs)) becoming an important property investment
vehicle since 2003. The purpose of this paper is to assess the significance, risk-adjusted performance
and portfolio diversification benefits of SIICs in a mixed-asset portfolio context in France over
2003-2012. The impact of the global financial crisis (GFC) on SIICs and their post-GFC recovery are
also assessed.
Design/methodology/approach – Using monthly total returns, the risk-adjusted performance and
portfolio diversification benefits of SIICs over 2003-2012 are assessed, with efficient frontiers and
asset allocation diagrams used to assess the role of SIICs in a mixed-asset portfolio. Sub-period
analyses are conducted to assess the impact of the GFC on SIIC performance, as well as their post-GFC
recovery.
Findings – SIICs delivered superior risk-adjusted returns compared to stocks over 2003-2012, but
with limited portfolio diversification benefits with stocks and more portfolio diversification benefits
with bonds. In the post-GFC period, SIICs have delivered enhanced risk-adjusted returns, but with no
recovery in their portfolio diversification benefits with stocks. SIICs are seen to contribute significantly
to the mixed-asset portfolio across the risk spectrum in the post-GFC period.
Practical implications – SIICs are a significant REIT market at the French, European and
global REIT levels. The results highlight the role of SIICs in a French mixed-asset portfolio.
The strong risk-adjusted performance has highlighted the robustness of SIICs; particularly
compared to French stocks, and the contribution of SIICs in a French mixed-asset portfolio across
the portfolio risk spectrum. This contribution by SIICs has been further reinforced in the post-GFC
period.
Originality/value – This paper is the first published empirical research analysis of the risk-adjusted
performance of SIICs and the role of SIICs in a mixed-asset portfolio. Given the increased significance
of REITs in Europe, this research enables empirically validated, more informed and practical property
investment decision-making regarding the role of SIICs in a mixed-asset portfolio; particularly in the
post-GFC period.
Keywords France, SIICs,Risk-adjusted returns, Portfolio diversification, Asset allocation,
Global financialcrisis, Post-GFC recovery, Portfolioinvestment
Paper type Research paper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1463-578X.htm
Received January 2011
Accepted June 2013
Journal of Property Investment &
Finance
Vol. 31 No. 6, 2013
pp. 575-588
qEmerald Group Publishing Limited
1463-578X
DOI 10.1108/JPIF-01-2011-0004
Significance and
performance of
French REITs
575
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