270 UK Equity Funds, AUM $190bn
UK Real Estate Hots Up
• Record number of UK funds now exposed to Real Estate sector.
• CT, BlackRock and Quilter among funds adding to exposure since mid 2023.
• SEGRO and Land Securities the key holdings and the drivers behind the recent rotation
Author: Steven Holden
Date: February 14th, 2024
Fund Universe: UK Equity
Record Exposure
The percentage of UK equity funds invested in the Real Estate sector has hit an all-time high this month. As chart 2 opposite shows, a record 83.3% of the 270 UK funds in our analysis now own a position in the Real Estate sector, pushing average weights higher at a faster pace than the FTSE All Share index in recent months (ch1&4).
As a result, the net underweight has tightened from -1% in late 2021 to just -0.18% today (ch7), with a record 42.2% of funds positioned overweight the benchmark index (ch8)
Sector Rotation
The charts opposite show the changes in sector exposure and ownership between the recent lows of 6/30/2023 and 01/31/2024. Real Estate emerged as a major beneficiary over the period, securing the second-largest increase in average weight and funds invested of 0.42% and 1.85% respectively. It was the only sector to see net inflows and more buyers than sellers.
Stock Holdings
On a fund level, 188 funds increased their Real Estate holdings from 06/30/2023 to 01/31/2024, compared to 38 funds that reduced their stakes. Additionally, 5 funds opened new Real Estate positions, with no exits reported. Value and Yield funds saw the most significant increases, though Growth funds also participated.
The largest gains in Real Estate exposure were recorded by BlackRock UK Income (3.97%) and BNY Mellon UK Income (2.9%), with Yield managers making up 7 of the top 10 increases.
Scroll down to view the major stock holdings in the Real Estate sector, split by fund style.
UK Real Estate: Stock Holdings Data by Fund Style
Analysis taken from our UK Equity positioning research, covering 270 active strategies with a combined AUM of $190bn. For more information on our research, contact me directly on the email below.
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