The property derivatives market has seen growing activity during the past 12 months, but Goldman Sachs' product is the first listed tracker.
A survey carried out last year by the London-based Property Derivatives Interest Group found high demand for property derivatives among institutional investors, which is the main target for Goldman Sachs' new tracker. But it also found that most investors would prefer more specific underlyings to the all-property index, to allow tactical reallocation.
Derivatives are considered preferable to direct investment because of the expense of stamp duty and other transaction costs of investing in property directly. They also provide the ability to structure exposures more accurately.
The week on Risk.net, December 2–8, 2016Receive this by email