ARES Japan Fund Index

ARES Japan Fund Index ("AJFI") is the index calculated from the universe of core funds' performance. These funds generally borrow some external debt for leverage effect, so this kind of fund index is also called "Leveraged Property Index.

Conceptual diagram of AJFI

• Unrealized gain/loss = Change in NAVs
  NAV = Total assets - Total liabilities = invested Capital + capital appreciation
  Capital appreciation = Market value (External appraisal value) - Bookvalue

AJFI is the performance index calculated from weighted average income returns and capital returns which are provided from unlisted private funds' data (undisclosed) and listed REITs' data (disclosed).

• Operating Income here equals net profit minus (profits and losses from investment transactions)

Inclusion of listed REITs' data

As J-REITs, Japanese Real Estate Investment Trust, are different from REITs in other countries with the following three points, they can be classified as "plain core fund" and included in the AJFI.

• J-REITs' activities are regulatory restricted to be rental business for the long-term investment
• Disclosing external appraisal value by property twice per year
• Disclosing operating data such as NOI and Sales proceeds by property

J-REITs' equity, as you know, is listed and traded in the market, but AJFI includes non-traded NAV changes of J-REITs' equity by reckoning listed J-REITs as non-traded private funds.

On the other hand, the open-ended core funds are included in the composite of unlisted private funds, and they are similar to J-REITs in terms of "the leverage level" and "plane core strategy".

AJFI Fact Sheet