New and niche
ONE ASSET CLASS attracting quite a lot of interest from South African investors is that of property overseas. The reasons for that are obvious: diversification offshore, exposure to hard currency assets and – topping the list for many South Africans – be an opportunity to remove some of their perceived SA-based asset risk.
For that reason they may be interested in a new property offering from Grindrod Asset Management. For most retail investors, Grindrod isn’t a name that would be front of mind when considering an investment product, but more likely associated to the group’s shipping businesses. But the niche manager is carving out a reputation of solid performances in the property sector and might be a name to watch in the future.
The manager established its Grindrod Global Property Income Fund in 2009, which currently has around R470m in assets under management and recently announced an offshore offering in the form of its Grindrod International Property Fund (IRE).
The product will allow SA investors to obtain offshore exposure to markets such as the United States, Canada, Eurozone countries, Britain, Singapore, Japan, Hong Kong and Australasia, with 90% of the fund’s assets sitting in those markets.
“The SA Reserve Bank recently raised the individual offshore investment allowance to R4m/ person/year, increasing the need for attractive international investment options for South African investors. Hence the creation of this fund,” says fund manager Greg Rawlins.
Listed offshore property hasn’t been the best investment class over the past few years, particularly with a strong currency. So why invest in this fund? “The new fund has a forward yield of 6,5% – in stark contrast to the low bond and money market yields investors have been forced to accept in international markets since central banks cut interest rates to stimulate economic growth,” Rawlins says. He describes the fund as having a medium risk profile due to geographic, currency and sector diversification.
Investors used to quarterly distributions from their property investments should note IRE instead has a biannual