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Question of the Week - June 21st 2016

How do REIT trading costs vary across regions?

 

Chart 1: REIT trading cost distributions by region 

 

Chart 2: Quarterly REIT trading volume across regions 

 

  • REITs offer an indirect way for institutions to invest in real estate markets, and as such, REIT trading is directly tied to overal economic conditions. Market conditions were relatively stable in Q1 and Q2 2015 before global concerns surrounding China’s economy created volatility in 2H 2015. We study REIT trading during this period and highlight high level trends in cost and volume.
  • The distribution of trading costs is tightest for North American REITs followed by UK, Europe ex UK and Asia Pacific ex Japan. Realized cost distribution was widest for Japanese REITs, ranging from -135 bps to +125 bps.
  • In all regions except UK, REIT volume as a percentage of overall volume is down in Q1 2016 compared to Q1 2015. Increased volatility in latter quarters may have contributed to decreased trading in these securities.

 

Q1 2015 – Q1 2016 data was sourced from a static group of clients within ITG’s Peer Group Database. Implementation shortfall costs are measured relative to the release to the desk and are expressed in basis points.

 

Refer to ITG Peer Analytics for information on available ITG Peer Group Database based analytics.

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