Hazelview research suggests hands-on strategies deliver better returns with less risk over time
Active management continues to demonstrate a clear and persistent advantage in global real estate securities, according to new research from Hazelview Investments that challenges the case for passive exposure in the sector.
In a recent white paper the Toronto based firm analyzed long-term performance data and found that actively managed global REIT strategies have consistently outperformed passive approaches, generating stronger absolute returns while also delivering better risk-adjusted outcomes across multiple market cycles.
The research points to structural shortcomings in passive global REIT products as a key reason for the performance gap. Passive funds can differ widely based on how their underlying indices are constructed, including variations in regional weightings, sector exposure and fees. Active managers, by contrast, are able to adjust portfolios as conditions change, allocate capital toward more attractive segments of the market and avoid constraints that come with benchmark tracking.
Over a 15-year period, active global REIT strategies outpaced passive alternatives by 151 basis points on an annualized basis, according to the analysis. In practical terms, a $10,000 investment would have grown to $25,718 under active management, compared with $20,789 in a passive strategy — a cumulative advantage of roughly 24%. Active approaches also produced higher return-to-risk ratios and lower volatility than their passive peers.
“Real estate remains one of the few areas in global capital markets where active management reliably creates value,” says Sam Sahn, managing partner and portfolio manager at Hazelview Investments.
The findings align with broader industry data showing real estate as one of the more fertile areas for active management. Citing Morningstar’s 2025 midyear active/passive barometer, the paper notes that 43.5% of actively managed real estate funds both survived and outperformed their passive counterparts over the past decade. That compares with a 10-year success rate of just 21% across the broader active fund universe.
Hazelview also highlights several practical tools available to active managers that passive strategies lack. These include the ability to tilt portfolios toward higher-growth segments such as senior housing, invest in real estate operating companies that fall outside major REIT indices, and participate early in IPOs and equity raises before securities are added to benchmarks.
Active managers can also position portfolios ahead of index rebalances, potentially benefiting from price movements driven by large passive fund flows once changes are implemented.
"Our commitment to disciplined research, global reach, and capturing real estate value that passive strategies often overlook positions us to continue delivering strong performance," adds Sahn. "Active management remains essential as investors seek to navigate an increasingly complex global real estate landscape."
The white paper argues that these structural advantages help explain why active strategies have continued to add value in global REIT markets, particularly at a time when real estate fundamentals, interest rates and regional trends are diverging more sharply across the globe.
