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Cost transparency in real estate funds

Cost transparency in the investment world has been a hot topic for some years, but has received renewed attention recently as a result of two areas of development:

  • Initiatives by industry bodies to achieve greater consistency in reporting by funds to investors. The work of the Association of Real Estate Funds (AREF) in this area is discussed further below. This has been driven particularly by defined benefit pension schemes. As they become mature and de-risk, there is an increased allocation to core long-income from UK real estate. In a low risk, low return environment, erosion of returns by costs becomes a crucial consideration.

  • Increasing concern that the very rigid approach to managing costs for defined contribution pension schemes is actually damaging outcomes for policy holders. The Department of Work & Pensions recognise the inflexibility of the charge cap and ran a consultation until 18th January 2022. You can find our response to the consultation here. We have previously commented on the problem of the charge cap by citing Oscar Wilde's definition of a cynic, who “knows the price of everything and the value of nothing”. The DWP response and further consultation was published on 30th March. You can find it here.

This will remain an important focus over the coming months.

Our involvement

In addition to the work on DC schemes mentioned above, John has been involved in promoting greater cost

transparency in real estate for a number of years. He was the author of the 2017 AREF / INREV report "Cost Transparency in European Listed and Non-Listed Real Estate". You can find it here.

He currently chairs the Association of Real Estate Funds (AREF) CTI & Expense Ratio Working Group. It has two roles:

  • Working with the Cost Transparency Initiative (CTI) to enable cost data for real estate funds to be recorded in a consistent and clear way on the templates.

  • Reviewing AREF's Total Expense Ratio guidance.


He represents the real estate industry on the CTI Technical Expert Panel.

The Cost Transparency Initiative (CTI)


The Cost Transparency Initiative (CTI) was launched in November 2018 - it is an independent group supported by the Pensions and Lifetime Savings Association (PLSA), the Local Government Pension Scheme Advisory Board and the Investment Association (IA). It is a new industry standard for institutional investment cost data.

You can find more details here.

AREF Total Expense Ratio guidance

AREF’s CTI & Expense Ratio Working Group has been reviewing AREF’s guidance on expense ratios. It proposed that AREF bring its guidance in line with the Total Global Expense Ratio (TGER ) agreed by INREV, ANREV, NCREIF and PREA that came into effect from 1st January 2021.

Following a consultation, the new guidance came into effect on 1st April. Points raised during the consultation have been addressed in a Q&A on the AREF website. Further questions and answers will be added.

The final rules and an updated Q&A can be found 


Tel: 0207 237 0374

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