Developed market real estate outpaced emerging market real estate during the second quarter. U.S. real estate companies returned 6.96% and developed market real estate companies outside of the U.S. returned 8.57%, while emerging market real estate lagged with a return of 0.96%.
Global equities provided positive returns in the quarter, driven by positive global economic growth indicators and continued accommodative monetary policy from a range of central banks. The market shrugged off mounting geopolitical risks, including continued instability in Ukraine and the rise of the Islamic State of Iraq and the Levant (ISIS), instead appearing to focus on positive signals from the corporate sector and the global economy in general. Global growth appeared to accelerate during the period after a dismal first quarter resulting partly from an unusually harsh U.S. winter. An increase in U.S. merger and acquisition activity contributed to investor optimism, and upward earnings revisions further boosted the markets. Despite the increased optimism and positive economic results, central banks remained dovish. The U.S. Federal Reserve maintained its near-zero short-term rate policy and measured pace of bond purchase tapering, while the European Central Bank went further by introducing a negative deposit rate.
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