Italian pooled property funds continued to deliver stable returns at 1.2% in the first half of 2011, according to the IPD's Italian Pooled Property Fund Indices (Italian PPFI).

Returns fell only 20 basis points from the 1.4% delivered in December 2010 despite economic uncertainty affecting the country and the Eurozone. On an annual basis to June 2011, all pooled funds delivered 2.6%, the strongest return since the downturn began.

Specialist funds continue to outperform their balanced counterparts, a trend also seen in the UK and pan-European PPFIs. Specialist funds returned 1.4% in H1, while balanced funds saw returns fall to -0.4%. Balanced funds, with their wide exposure to most segments of the market, have suffered in the uneven recovery.

'Italian property funds have posted relatively strong returns, despite the turbulent regulatory context which is causing much debate even as we publish these results,' said Luigi Pischedda, IPD's country manager for Italy. 'However, the slight contraction of the Index performance compared to December numbers and the variety of behaviours in the sub-indices should not be overlooked.'

A closer look at the numbers shows negative NAV growth, implying the overall return was kept in positive territory by dividend distributions. Furthermore, the performance gap between balanced and specialist funds has remained wide, with the former slipping below zero.