Property funds
Top ranked funds 3-year performance
FUND PICKER’S COMMENT
TONY YOUSEFIAN, FUND
MANAGER, OPM FUND
MANAGEMENT
The top-ranked property
funds over three years fall
into two distinct groups,
those where the returns are
largely uncorrelated to the
global economy and those
in a specific geographic
area, namely Asia.
It is interesting to see
three funds at the top of
the list run by one company,
namely Brandeaux.
Student housing has evaded
the property slump and is
proving to be uncorrelated
to the economic cycle. The
company operates an interesting
business model and
last year significantly
increased its number of
units by acquiring 3,810
beds from Unite.
While the performance
of these three funds has
been admirable, it is questionable
whether these
funds will remain at the
top of the performance
tables in a more favourable
economic environment.
Indeed, looking at performance
over a one-year
period, the funds have
lagged the sector significantly.
In the long run we
would expect better returns
to be found elsewhere, but
the low volatility and
smooth returns will continue
to appeal to many
investors.
Two of the funds listed
are exchange-traded funds,
both from the UK’s largest
ETF provider, iShares. ETFs
can provide cost-effective
and transparent exposure
to a particular market and
are used both for longterm
holdings and for
short-term trading opportunities.
We make significant
use of ETFs within our
fund range and the CF
OPM Property Fund has
been no exception. In a
sector that has struggled
with liquidity, ETFs have
been extremely beneficial
in active asset allocation
processes targeting specific
geographical areas.
We would hope to see
improvements in the global
economy and predict higher
underlying commercial
property prices, so it is
unlikely the same names at
the top of the performance
table will still be there in,
say, three years’ time. Bricks
and mortar funds, hit hard
by redemptions in 2007-08,
now have to contend with
the difficulty of investing
the inflows from new
FUND ANALYSIS
FUND SELECTOR PROPERTY FUNDS
We analyse the best, the newest and the biggest property funds.
Commentary from Tony Yousefian, fund manager, OPM Fund Management
To 11 Nov ’09. Bid to bid, $, gross income, no cap. Source: Morningstar
■ In the year to 11 Nov ’09, the Henderson Horizon Asia Pacific
Property Fund has returned 47.3%, a huge turnaround having lost
nearly 40% in the previous 12 months.
■ The fund holds the majority of its securities in Japan (33.3%) and
Hong Kong (25.8%), with the rest in China, Singapore, Australia
and a minority (0.7%) in India. Cash makes up 5%.
■ The fund manager, Frankie Lee, was concerned over asset
inflation earlier in the summer though adds this will give further
impetus to invest in the growth prospects of Asian property
securities. He adds this can only improve with global attention
shifting further to Asia.
investment in a highly competitive
environment for
high quality property.
Nevertheless they should
move to a more stable base
and start to recover both in
income and capital terms.
Selectively Real Estate
Investment Trusts (Reits)
Top 10 property funds by 3-year performance
still offer significant upside
potential and therefore a
fund that invests in both
types of property fund may
well be best positioned to
outperform a bricks and
mortar fund with less volatility
than a Reits
only fund.
3-year 3-year 3-year 3-year 3-year Morningstar Fund Domicile
% chg Alpha Beta R² mth vol Rating size ($m)
Brandeaux Student Accomodation 34.66 0.81 -0.01 0.02 0.45 – N/S BVI
Brandeaux Sterling 28.36 0.7 0.01 0.01 0.5 – N/S BVI
Ground Rent Portfolio Limited 21.24 0.54 0 0 0.75 – N/S BVI
Schroder ISF Asia Pac Prty Sec A USD Acc 19.55 0.92 0.81 0.81 7.45 ★★★★★ 75.46 Luxembourg
MS INVF Asian Property A 9.49 0.72 0.86 0.79 8.1 ★★★ 526.15 Luxembourg
iShares FTSE EPRA/NAREIT AsiaPrptYld Inc 9.08 0.75 0.96 0.8 8.97 ★★★★ 98.44 Ireland
iShares FTSE/EPRA European Prpty 6.22 0.57 0.84 0.66 8.56 ★★★★★ 336.57 Ireland
Henderson Horizon Asia Pac Prpty A1 1.78 0.55 0.89 0.78 8.41 ★★★ 215.22 Luxembourg
iShares DJ STOXX AsiaPac 600 RE (DE) -1.08 0.34 0.79 0.78 7.41 ★★★ 15.24 Germany
First State Asian Property Sec A Inc -8.41 0.11 0.75 0.7 7.48 ★ 9.39 UK
Top 10 funds – 3-year risk/return
Return (%)
40
30
20
10
0
-10
Brandeaux Student Accomodation
Brandeaux Sterling
Ground Rent Portfolio Limited
Schroder ISF Asia Pac Prty Sec A USD Acc
MS INVF Asian Property A
iShares FTSE/EPRA European Prpty
Henderson Horizon Asia Pac Prpty A1
iShares DJ STOXX AsiaPac 600 RE (DE)
First State Asian Property Sec A Inc
iShares FTSE EPRA/
NAREIT AsiaPrptYld Inc
-20
Sector average
0 2 4 6 8 10
Standard deviation (%)
To 11 Nov ’09. Bid to bid, $, gross inc. no cap. Source: Morningstar
Top 3 performing funds vs world index
JANUARY 2010 [www.portfolio-adviser.com] PORTFOLIO ADVISER
%
40
30
20
10
0
-10
-20
Brandeaux Student Accomodation
Brandeaux Sterling
-30
-40
MSCI World
Nov ’06 May ’07 Nov May ’08
Source: Morningstar
Ground Rent
Portfolio Limited
Nov
May ’09
Nov
29
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