The Markets August 8, 2007

S&P Tracks Commercial Real Estate in New Indexes

Standard&Poor’s on Tuesday launched its S&P /GRA Commercial Real Estate Indices.
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A news release said the indexes measure the change in commercial real estate prices by property sector and geographic region. The S&P/GRA Commercial Real Estate Indices are created jointly with GRA, the real estate research and investment management group of Charles Schwab Investment Management.

According to the announcement, the S&P/GRA Commercial Real Estate Indices are composed of ten commercial real estate indexes:

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  • a national composite;
  • five geographic regions (Desert Mountain West, Mid-Atlantic South, Midwest, Northeast, and Pacific West); and
  • four national property sectors (apartments, office, retail, and warehouse).

S&P said, each month, GRA collects and codes thousands of completed commercial real estate transactions to provide the foundation for the price-based indexes. The indexes are maintained and published by Standard & Poor’s and GRA.

The S&P/GRA Commercial Real Estate Indices are calculated to reflect underlying real estate and capital market fundamentals by measuring the change in commercial real estate prices by property sector and geographic region.

Reported index values are based on a three-month rolling average transaction price per square foot and are computed using a stock value, or market capitalization-weighted, methodology. This approach utilizes average transaction prices per square foot and commercial real estate stock data to derive index levels.

“With the launch of our commercial real estate indices, Standard & Poor’s is bringing liquidity and tradability to an important and growing asset class,” said David Blitzer, Managing Director and Chairman of the Index Committee at Standard & Poor’s, in the news release. “As they are completely based on closed commercial real estate transactions, investors will be able to account for actual movements in commercial real estate prices in the U.S.”

More information is at www.spcrex.standardandpoors.com.

Products August 8, 2007

UBS Takes Active Approach to Target Date Funds

UBS Global Asset Management has come out with a new generation of UBS TargetRetirement Collective Funds that use an actively managed approach.
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According to the press release about the revamped product, the two changes to UBS’s target date funds are:

  • The funds implement an active asset allocation investment strategy based on a 25-year time-tested process, rather than using set allocations. Allocation decisions are dynamic and are driven by the firm’s risk/return expectations for global capital markets.
  • Rather than using stocks as the only way to increase or decrease the overall market risk profile of the funds, UBS actively manages the four major retirement risks faced by participants: the risk of not accumulating enough money; the risk of a downturn in market performance near retirement; the risk that inflation will erode purchasing power; and the risk of outliving retirement savings.

The firm is also looking into features such as including a “guaranteed income for life” option provided by an insurance company to help manage longevity risk, according to a press release.

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“The prevailing “autopilot’ mentality should apply to the participant, but not the investment manager,” said Drew Carrington, head of UBS Global Asset Management’s Defined Contribution and Retirement Solutions Group, in the press release. “Active asset allocation and management of the key participant retirement risks are required to deliver optimal participant outcomes.’

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