(Bloomberg) -- Barings is exiting the business of managing mutual funds that invest in real estate stocks as it retools its strategy in the sector.
The Charlotte, North Carolina-based firm runs the $1 billion Invesco Oppenheimer Real Estate Fund and the $53 million Dunham Real Estate Stock Fund on behalf of outside companies. Barings told Dunham & Associates last week that it will stop sub-advising the Dunham fund as of Jan. 1, according to a Nov. 7 filing with the U.S. Securities and Exchange Commission.
Investor demand for assets outside of public markets is growing, according to Preqin. Such assets are yielding higher returns than publicly traded securities for investors and higher fees for money managers, said Paul Gulberg, an industry analyst at Bloomberg Intelligence.
“You very clearly see a rotation to private assets in general,” Gulberg said in a telephone interview. “The new approach from the investor perspective is to get alpha on the private side.”
Barings is jettisoning its sub-advising arrangement at a time when the two funds are but a small part of its assets. The firm had $43.6 billion in real estate as of June 30, most of it outside of public markets, according to its website. Barings, which is owned by Massachusetts Mutual Life Insurance Co., managed more than $335 billion as of Sept. 30.
“We are exiting the actively managed REIT equity business in order to focus and grow our core real estate strategies,” Rachel White, a Barings spokeswoman, said Friday in an emailed statement. Barings “remains active in private real estate equity along with public and private real estate debt.”
Both mutual funds have posted gains of more than 24% in 2019, outperforming the majority of their peers, as REIT stocks have rallied. The Bloomberg U.S. REITs Index is up 20%, on pace for its best year since 2014.
MassMutual owned the OppenheimerFunds until May, when it completed their sale to Invesco Ltd.
To contact the reporter on this story: Miles Weiss in Washington at email@example.com
To contact the editors responsible for this story: Sam Mamudi at firstname.lastname@example.org, Josh Friedman, Dan Reichl
©2019 Bloomberg L.P.