FUND PICKER’S COMMENT
TONY YOUSEFIAN, FUND
MANAGER, OPM FUND
MANAGEMENT
The bulk of the funds in
this sector are traditional
bricks and mortar funds.
These are generally longestablished
– the Aviva
Property Trust having been
launched as long ago as
Sept ’91.
While these are identified
as funds having the
largest sums under management,
they are considerably
smaller than they were
at their peak. A combination
of falling asset prices
and significant redemptions
has taken its toll. New Star
UK Property, for example,
is currently £647.12m
having contracted some
70% since 31 May, 2007,
when it was valued at
£2.154bn.
A number of the funds
listed were forced to
impose redemption restrictions
in order to protect
existing investors, and to
allow assets to be sold in
an orderly fashion to provide
liquidity. The extreme
market conditions of late
2008 led many to ask
whether open-ended property
funds were still a
viable proposition, as
investors were unable to
sell the assets they owned.
We moved our own
property fund completely
away from bricks and
mortar funds as concerns
about liquidity grew. Now
that the majority of the
FUND SELECTOR PROPERTY FUNDS
Top ranked funds Assets under management
To 11 Nov ’09. Bid to bid, $, gross income, no cap. Source: Morningstar
restrictions have been lifted,
and yields have reached
historically high levels, it is
felt building up some exposure
is appropriate. On the
whole funds which previously
had liquidity problems
or which may have
been distressed sellers of
property have been avoided.
From the largest funds
we have committed monies
to Gerry Ferguson’s managed
SWIP Property Trust
and to the M&G Property
portfolio managed by Fiona
Rowley. Both of these funds
have low void rates, stable
tenancies and reasonably
long-term leases so they
should produce reasonable
income and capital returns
over the longer term.
While these large funds
appear to be over the worst,
it may well be that new
monies will be invested in
one of the many new funds
listed on the London Stock
Exchange that have been
launched in recent months.
Simultaneously we have
seen a number of new
open-ended issues from
Aviva and Standard Life so
new investors are spoilt for
choice. The major concern
for potential investors in
new funds is not just the
speed at which monies are
invested but the prices paid.
At times of acute shortages
of prime property, large
established and fully invested
funds have their attractions
provided new inflows
do not rise so rapidly that
they dilute the income and
capital returns.
Top 10 property funds by assets under management
FUND ANALYSIS
■ One of only two funds in this table to give positive returns over
three years (8.66%) is the Asian Property Fund from Morgan
Stanley Investment Funds. Over the past year, to 11 Nov ’09, it
has returned 44.7%.
■ In her most recent fund report (for October this year) the fund’s
manager, Singapore-based Angeline Ho, attributed the positive
outcome from being overweight Hong Kong and China and
underweight Australia.
■ At the same time, Ho confirmed she has added marginally to
Australia and Singapore, while remaining overweight Hong Kong,
China and Japan. Across the region, she is buoyed by the signs of
improving real estate market fundamentals and is looking more to
operating companies rather than the Reits themselves.
Top 3 AUM funds vs world index
Top funds by AUM – 3-year risk/return
-40
Aviva Investors Property Trust Inc
Standard Life Select
-50
New Star UK Property A Acc
Property R Acc
1 2.5 4 5.5 7 8.5 10
Standard deviation (%)
To 11 Nov ’09. Bid to bid, $, gross inc. no cap. Source: Morningstar
3-year 3-year 3-year 3-year 3-year Morningstar Fund Domicile
% chg Alpha Beta R² volatility Rating size ($m)
SWIP Property Trust Acc -26.8 -0.88 0.05 0.05 2.08 – 1,389.81 United Kingdom
Aviva Investors Property Trust Inc -37.31 -1.3 0.09 0.09 2.54 – 1,323.78 United Kingdom
M&G Property Portfolio A Inc -26.61 -0.87 0.06 0.03 3.01 – 756.08 United Kingdom
New Star UK Property A Acc -33.57 -1.27 0.07 0.05 2.32 – 647.12 United Kingdom
Standard Life Select Property R Acc -46.16 -1.61 0.56 0.65 5.77 ★ 604.23 United Kingdom
MS INVF Asian Property A 8.66 0.72 0.86 0.79 8.1 ★★★ 526.15 Luxembourg
Ignis UK Property Inc -23.71 -0.74 0.09 0.08 2.79 – 452.1 United Kingdom
SWIP MM Global Real Estate Sec A Inc -13.71 -0.08 0.86 0.93 7.36 ★★★★ 386.4 United Kingdom
Schroder Glbl Property Securities A Acc -17.81 -0.13 0.92 0.93 7.91 ★★★★ 337.81 United Kingdom
iShares FTSE/EPRA European Prpty 4.88 0.57 0.84 0.66 8.56 ★★★★★ 336.57 Ireland
Return (%)
10
0
-10
% -20
-30
-40
-50
SWIP Property Trust
M&G Property Portfolio
Aviva Investors Property Trust
Nov ’06 May ’07 Nov May ’08 Nov
Source: Morningstar
10
0
-10
-20
-30
MS INVF Asian Property A
SWIP Property Trust Acc
iShares FTSE/EPRA
European Prpty
Ignis UK Property Inc
SWIP MM Global Real
Estate Sec A Inc
M&G Property Portfolio A Inc
Sector average
MSCI World
Schroder Glbl Property
Securities A Acc
“
The extreme
market conditions
of late 2008 led
many to ask whether
open-ended property
funds were still a
viable proposition, as
investors were unable
to sell the assets they
owned
”
JANUARY 2010 [www.portfolio-adviser.com] PORTFOLIO ADVISER
May ’09
Nov
31
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