“Some of the good active LPT managers are really uncomfortable holding such skewed portfolios. We think that’s fine, but we want them to beat the benchmark, and if it’s skewed we need strong views to be expressed but still be benchmark-relative.”

The combination of the two benchmarks must relate back to the ASX 300 A-REIT index, against which the total portfolio is managed.

Perennial, which can research and pick stocks globally, can also invest up to 15 per cent of its mandate in opportunistic plays offshore.

This was increasingly important – for ipac and Australian LPT managers generally – as there have been suggestions that the domestic market could become so concentrated that it may no longer be an asset class and instead become part of the global listed property universe.

“You want strong local players that can pick stocks globally. If it turns out that the A-REIT market does not stand as an asset class and will migrate to G-REITs, you still want to be able to tilt to A-REITs.”

But the local market could be revitalised by unlisted property managers who list in order to gain liquidity, Rogers said.

“If you’re left with six or eight legitimate investments, it’s the death knell for a stand-alone asset class. But there could be a regeneration of the asset class as unlisted pools seek liquidity and list. We need to be prepared for either eventuality.”

To appoint Vanguard and Perennial, ipac culled mandates with SG Hiscock and Legg Mason Asset Management.

The multi-manager favoured the medium-to-long-term outlook for listed property over unlisted property, since trusts were already beaten-down to punishingly low valuations, while unlisted property assets were due to begin the revaluation cycle.

It has selected reserve managers that would
replace Vanguard or Perennial in case the managers experienced significant
setbacks that could be detrimental to their ongoing performance.