"Looking at portfolio construction practices in global real estate securities funds over the past decade-plus, the one thing that asset owners probably want to ask about their actively managed allocations is "Why won't active managers pick stocks?" comments Witold Witkiewicz, Founder of Kania Advisors.

Kania Global Agriculture CAI Index outperformed its market-cap weighted benchmark by 182bps in the month of June 2019, taking the 3-month and 6-month (and YTD) outperformance to 118bps and 514bps respectively.

Kania Global Real Estate Indices, CAI and CORE smart beta indices, can be used to replicate the performance of actively managed products to a high degree.

Speaking today at Exchange Traded Forum 2019 in London organized by Radius Europe and sponsored by the Financial Times, among others, Witold Witkiewicz explained why institutional investors allocating to listed real estate are facing significant inefficiencies in both actively managed options as well as those based on general equity market factors and the solutions that can fundamentally improve alpha generation.

Factors specific to real estate provided positive performance in #smartbeta indices compared to general fundamental factors applied to global real estate securities sector.

Investors with exposure to factor based strategies are likely to have value (or growth, being the opposite so we will only refer to value here) as their main allocation. In this note we aim to illustrate that value, as commonly defined, is likely to continue to underperform due to structural aspects.

In addition to factor research of listed global real estate securities markets, Kania Advisors is expanding its coverage to include listed infrastructure and agriculture sectors. The company will also provide both specific structural factor data as well as factors based on machine learning processes applied to market data.

Generally, active managers have continued to improve active profile, the overall active share for the sector as of H2 2018 stands at 56% compared to 52% in H2 2017. There has also been a meaningful improvement in active share of large-caps, a segment that historically had low active share utilization. On the other hand, there has been an increase in portfolio concentration in less liquid small-caps.

Residential bridge and development finance can be an attractive allocation for institutional investors, however lack of standardized market data and information add a level of complexity in evaluating these strategies. New data sources and big data analytics can close the information gap for these new and increasingly important allocations through specific risk and rating methodologies. Implementing these new tools and technology can provide vital quantifiable risk metrics and profiles, can improve decision making processes at the outset and provide near real-time risk management tools for ongoing portfolio monitoring.