IPREO REGIONAL FLOW OF FUNDS SERIES

Western Europe

Real Estate

Q2 2017

Institutional Investment Flow Highlights

Flow of Funds: WEU Real Estate

Market Overview

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Net Change ($M Value) by Region

Q3-16

Q4-16

Q1-17

Q2-17

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Net Change ($M Value) by Style

Q3-16

Q4-16

Q1-17

Q2-17

W. Europe 36.3%

N. America 26.8%

UK & Ireland 17.1%

Scandinavia 15.6%

Asia 2.3%

Rest of World 0.8%

Other 1.0%

Ownership by Region

Agg Gr./Growth 32.9%

Deep Val./Value 32.3%

Index 17.6%

GARP 3.1%

Specialty 3.9%

Yield 7.5%

Alternative 2.6%

Ownership by Style

• Q2-17 investor sentiment continued to show US equities out of favour. "US equities were judged “by far” the most overvalued globally, with a net 84pc saying they are overvalued. Three quarters of respondents said US and global internet stocks were either “expensive” or “bubble like”, according to Bank of America Merrill Lynch (BAML) survey results for June 2017. The tech-heavy Nasdaq share index was seen as the “most crowded trade”, followed by Eurozone equities, which had enjoyed a lift after Emmanuel Macron’s victory. France was the most popular equity market in Europe in the same survey followed closely by Germany.

• Ipreo's analysis of Q2-17 funds flows showed, net inflows into Western European equities continued to grow for the third successive quarter nearly tripling to +$29.9B currently vs +$9.2B in the preceding quarter. The bulk of net inflows into the region continued to be driven by North American managers, particularly Index investors.

• That said the inflows into Europe are; • Predominantly focused on Central & Northern Europe which saw +$33.3B of net inflows. Swedish and German equities were top beneficiaries. Whilst just Austrian

and Luxembourg listed equities registered net outflows, -$152M and -$106M respectively. • Whilst the Q1-17 Passive-Active mix of inflows was on par 50-50, Q2-17 saw Passive inflows accelerate resulting in a 60-40 mix of Passive-Active inflows. The latter is

unsurprising given that investors piled record money into passive strategies. For example, consultancy ETFGI notes that more money came into ETFs over the first seven months of 2017 than did in the whole of 2016.

• North American driven with Scandinavian investors as the second largest buyers overall. Scandinavian managers are notable as the only consistent buyer of WEU equities over the last 12 months adding +$19.8B.

• UK & Ireland investors on the other hand turned bullish Q2-17 having been net sellers in all of the preceding quarter. UK & Ireland investors are however by far the top sellers of WEU equities over the last 12 months, -$34.1B.

WEU Real Estate • Sector registered cumulative net outflows over the last 12 months, -$1.7B. The bulk of this selling was led by UK & Ireland, Growth and Value investors. Whilst net Index

inflows (+$1.3B) mirrored the direction of wider WEU inflows, Yield ownership rose +$150M against a backdrop of strong selling across WEU equities by Yield investors. • At a sub-sector level both WEU Real Estate Development and WEU Real Estate Investment Trusts registered net inflows. WEU Property Management equities were the

most sold but Inmobiliaria Colonial, Buwog, Nexity, Deutsche Wohnen and PSP Swiss Property bucked the trend by ranking within the top ten WEU Real Estate most bought stocks for Q2-17 overall.

• Western European investor fund flows over the last 12 months have been a tale of two halves. Whilst the first six months of 2017 have seen -$840M outflows the preceding six months saw +$1.1B inflows. H1-17 has seen the growing risk of an unwinding of QE in Europe affecting WEU Real Estate equities.

• Similar to Western European investors, North American investment fund flows over the last 12 months have also been a tale of two halves. North American investors however took the contrarian view to WEU investors with +$1.5B inflows in the first six months of 2017 following -$1.6B outflows in the preceding six.

• Similar to observed selling of WEU equities by UK & Irish across the last 12 months, WEU Real Estate saw UK & Ireland investors pull -$1.8B from the sector over the same

• Index inflows continued albeit at a slower pace. Despite this slow down, Index Q2-17 inflows are 4x that of the next largest buyer, GARP (+$107M). Capital Research Global Investors topped the GARP buyers list. Capital Groups "World Markets Review - Second Quarter 2017" noted, "Cyclical stocks generally outpaced defensive sectors as investors rotated into companies that stand to benefit from Europe’s improving economic activity. The financial and real estate sectors led markets higher, gaining 4% each".

• Growth investors have been consistent sellers of the sector since Q4-16 with the latest quarter seeing an uptick in outlfows. Amongst the top ten Growth sellers, Alfred Berg Asset Management (Sweden) is notable as the most consistent seller of WEU Real Estate equities since Q3-16.

©2017 Ipreo. All rights reserved. None of Ipreo, its affiliates, or any of their third party providers is liable for any info rmational errors, incompleteness, or delays, or for any actions or decisions taken by any person as a result of any information contained herein.

Flow of Funds: WEU Real Estate

Country / City

Total Equity Assets

($M)

Value

($M)

Activity

($M)

#

Firms Country / City

Total Equity

Assets ($M)

Value

($M)

Activity

($M)

#

Firms

United Kingdom (London) 1,994,399 12,598 -233 130 United Kingdom (London) 1,994,399 12,598 -233 130

Norway (Oslo) 671,133 7,395 198 18 France (Paris) 341,172 6,061 -281 120

Netherlands (Amsterdam) 169,356 7,006 2 9 Spain (Madrid) 67,231 664 -21 64

Sweden (Stockholm) 254,490 6,720 103 53 United States (New York) 2,386,743 5,086 102 54

France (Paris) 341,172 6,061 -281 120 Sweden (Stockholm) 254,490 6,720 103 53

United States (New York) 2,386,743 5,086 102 54 Finland (Helsinki) 49,015 1,286 13 37

United States (Boston) 2,117,983 3,113 4 20 Germany (Frankfurt) 315,127 2,778 81 31

Germany (Frankfurt) 315,127 2,778 81 31 Switzerland (Zürich) 284,712 2,237 79 27

Belgium (Brussels) 58,111 2,624 -129 10 Luxembourg (Luxembourg) 35,146 201 1 26

Canada (Montreal) 115,976 2,373 5 6 Canada (Toronto) 590,310 739 8 22

Excludes Passive/Index Investors 55,754 -148 451 Excludes Passive/Index Investors 38,370 -147 564

Top Holders Country Turnover Value ($M) Change ($M) % Port.

% Port.

Chg

Norges Bank Investment Management (Norway) Norway Low 6,221.6 135.1 1.0 2.2

APG Asset Management N.V. Netherlands Low 5,732.8 -0.7 3.8 0.0

Caisse de dépôt et placement du Québec Canada Low 2,348.7 0.0 2.6 0.0

MFS International (U.K.), LTD United Kingdom Low 2,266.1 -101.0 4.5 -4.3

AXA Investment Managers Paris S.A. France Low 1,652.4 -21.2 10.0 -1.3

Länsförsäkringar Fondförvaltning AB Sweden Low 1,276.5 -43.5 52.8 -3.3

Thames River Capital, LLP United Kingdom Medium 1,202.7 27.6 56.7 2.3

BlackRock Investment Management (U.K.), LTD United Kingdom Low 1,172.7 184.0 0.3 18.6

Lansdowne Partners (UK) LLP United Kingdom Medium 1,078.8 0.0 6.8 0.0

Degroof Petercam Asset Management S.A. Belgium Low 1,074.5 -10.8 8.6 -1.0

18,221.6 12.2

Top Buyers Country Turnover Value ($M) Change ($M) % Port.

% Port.

Chg

BlackRock Investment Management (U.K.), LTD United Kingdom Low 1,172.7 184.0 0.3 18.6

Norges Bank Investment Management (Norway) Norway Low 6,221.6 135.1 1.0 2.2

Danske Capital AS (Norway) Norway Low 90.5 90.5 4.6 Buy-in

Capital Research Global Investors (U.S.) United States Low 344.9 74.8 0.1 27.7

MFS Investment Management United States Low 500.2 70.2 0.2 16.3

Deka Investment GmbH Germany Low 556.0 64.7 1.3 13.2

UBS AG (Asset Management Switzerland) Switzerland Low 640.6 60.6 0.5 10.5

TIAA-CREF Investment Management, LLC United States Low 406.2 60.0 0.1 17.3

Franklin Templeton Institutional, LLC United States Medium 164.9 57.4 2.3 53.3

Deutsche Asset Management (UK), LTD United Kingdom High 250.6 55.4 5.2 28.4

10,348.3 852.7

Top Sellers Country Turnover Value ($M) Change ($M) % Port.

% Port.

Chg

Aberdeen Asset Managers, LTD (U.K.) United Kingdom Low 314.4 -215.2 0.3 -40.6

Andra AP-Fonden (AP 2) Sweden Low 218.8 -192.9 1.4 -46.9

Aviva Investors France S.A. France Low 254.3 -150.6 4.7 -37.2

Artisan Partners, L.P. United States Medium 160.4 -111.1 0.2 -40.9

MFS International (U.K.), LTD United Kingdom Low 2,266.1 -101.0 4.5 -4.3

BNP Paribas Asset Management Belgium Belgium Medium 402.6 -87.6 6.7 -17.9

Northern Cross, LLC United States Low 616.2 -87.5 1.9 -12.4

Alfred Berg Asset Management (Sweden) AB Sweden Medium 656.3 -87.0 18.8 -11.7

Amundi Asset Management S.A. France Medium 648.6 -83.0 0.8 -11.3

Artemis Fund Managers, LTD United Kingdom Medium 68.8 -82.4 0.2 -54.5

5,606.3 -1,198.4

BOUGHT Securities Industry

Axiare Patrimonio SOCIMI SA Real Estate Investment Trusts

Entra ASA Real Estate Development

Inmobiliaria Colonial S.A. Property Management

Buwog AG Property Management

Allreal Holding AG Real Estate Development

SOLD Securities Industry

LEG Immobilien AG Property Management

Castellum AB Property Management

Gecina S.A. Real Estate Investment Trusts

Vonovia SE Property Management

TLG Immobilien AG Property Management

Value 77,133

Growth 27,880

Value 6,018

Value 31,720

Growth 3,488

278,949

Equity Assets ($M)

98,541

15,732

5,397

Change ($M)

Value

Yield

Equity Assets ($M)

16,505

50,837

90,210

152,033

613,536

Equity Assets ($M)

340,247

613,536

1,959

435,149

87,206

50,837

Value

Style

Growth

-79.8

Change ($M)

-342.5

-159.7

-111.9

-109.3

83.0

98.8

123.3

131.0

147.8

Most Bought & Sold Stocks

Most Invested Most Investors

Top Holders, Buyers & Sellers

Top Invested Cities

Style

Growth

Value

Yield

Value

Style

Growth

Value

Growth

Growth

Growth

Growth

GARP

Growth 12,527

15,781

340,247

2,122

2,418

Alternative

Growth

Growth

Growth

Growth 7,136

Alternative 4,836

Value 44,477

Yield 116,533

Growth 295,011

for any actions or decisions taken by any person as a result of any information contained herein.

©2017 Ipreo. All rights reserved. None of Ipreo, its affiliates, or any of their third party providers is liable for any info rmational errors, incompleteness, or delays, or for any actions or decisions taken by any person as a result of any information contained herein.

• Standard Life and Aberdeen announced a merger March 6 (2017) and have both recorded investor outflows, according to MorningStar "investors pulled £2.5 billion out of Standard Life and £1.7 billion out of Aberdeen Asset Management, making them the least popular fund houses of the year (i.e. 2017)." Consequently it comes as no surprise Aberdeen topped the sector sellers list as it sought to meet redemption requests.

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Real Estate Development Real Estate Investment Trusts Property Management

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Most Bought & Sold Sectors

Flow of Funds: WEU Real Estate

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