The NCREIF Fund Index - Daily Priced (NFI-DP) is an open-end fund-level index comprising a small universe of funds that are priced daily, offer investors some degree of daily liquidity and invest predominantly in private real estate.
Most, but not all, of the underlying funds also maintain a liquidity sleeve of predominately publicly listed REITs and cash to help facilitate the fund’s trading needs.
The NFI-DP is an equal-weighted, net of advisory fees, time weighted return Index of daily total returns. It is published monthly with an inception date of October 2009.
No, the NFI‐DP is not a subset of the NFI‐ODCE. Currently only one of the NFI‐DP funds meets the investment criteria of the NFI‐ODCE, which has strict investment restrictions with regards to type of investor (i.e. accessible by Defined Benefit Plan Sponsors), the percent of assets to be invested in private equity real estate, diversification across the four main property types and four regions, and a maximum leverage limit.
Since the universe of NFI‐DP is small and the funds’ sizes (as well as other characteristics) vary significantly, an equal‐weighted index will provide a better representation of the performance of the peer group. If the Index were value‐weighted, the performance would be biased to the larger fund(s).
Many of the funds included in the index do not calculate or publish gross of fee net asset values or returns. The NFI‐DP is calculated and published net of advisory fees and incentive fees, but gross of brokerage related fees and commissions (if a fund has these).
No, the NFI‐DP returns are calculated gross of brokerage related fees and commissions. Institutional investing does not have brokerage fees and commissions that are typically associated with retail products. While there are a few funds that are marketed primarily to retail investors, and therefore, may, charge brokerage fees and commissions, these fees are excluded from the net of fees returns utilized in the calculation of the Index. Further, by excluding these retail investor costs from NFI‐DP, the calculations are more comparable to the NFI‐ODCE and NCREIF’s other institutional products.
Daily Priced means that each fund has a daily valuation policy and process that is implemented consistently and includes daily evaluation of significant market and operational events when calculating the daily price.
Currently the NFI‐DP consists of 8 funds that most closely represent core risk investment strategies; they generally target capital preservation, and stable operating income returns using moderate amounts of leverage. Although the types of investments will vary from fund to fund, they predominantly invest in private equity real estate, either directly or through fund of fund structures, along with public listed securities and cash to accommodate the daily liquidity provisions. As the universe of daily priced funds expands, NCREIF will monitor the product offerings and determine how to position products with non‐core strategies.
Investors in listed REITs buy and sell securities on a public exchange, the price of which is often influenced by supply and demand as well as other non‐real estate market forces. Investors in the funds included in the NFI‐DP buy and sell directly with the sponsor (manager) of the fund, the price of which is based solely on the daily valuation of the underlying investments in the fund.
The NFI‐DP returns are not “frozen” (i.e. the results are subject to change) because it is not considered a benchmark. The universe of funds is expected to grow and additional historical data is anticipated.