Fund gives access to real estate in other countries

Fairtree has launched a specialised investment fund that offers South Africans exposure to an array of real-estate markets in countries they have not had access to before.

Investors can buy into the Fairtree Global Real Estate Prescient Fund which has been running for a year and they will not have to use up their personal offshore allotment.

The fund outperformed the FTS/JSE South African listed property index by 4% in its first year of operation.

The Fairtree Global Real Estate Prescient Fund was up 6.49%, outperforming the benchmark by 4.08% in terms of gross performance, before expenses and management fees, after its first year of operation.

“We follow a top-down lead investment approach, which gives us three bites of the apple to generate alpha, said co-portfolio manager Rob Hart. “Our team starts with the geographical overlay of country selection, then moves on to sector selection, and finally stock selection.”

The fund’s managers consider a universe of 331 developed country property stocks and are invested in 30 to 40 stocks at any time. This universe is diverse and Fairtree has significant exposure to Asian stocks. South African real-estate investment trusts have not invested in Asian property in the past because of barriers to doing business, such as language, tax laws and other regulations.

But Hart said South African investors could now get exposure to Hong Kong and Japan through the Global Real Estate Prescient Fund.

The fund is competing with similar products run by the likes of Stanlib.

According to portfolio manager Ryan Cloete, the divergence in country and sector performance also supports the argument for active versus passive management.

“There is an enormous divergence in listed real estate returns across the various countries in which we invest,” said Cloete. “For example in 2017, Singapore developers were up circa 45%, while Japanese REITS were down circa 5%. From a sector perspective, US data centres were up almost 30%, while US shopping centres were down 11% over the same period.”