Fund manager

Finweek English Edition - - FUND IN FOCUS - Mot­tiar is pre­dict­ing

a lot of mar­ket volatil­ity ahead. Ris­ing in­ter­est rates, for ex­am­ple, will hurt listed prop­erty “ini­tially, but my view is that listed prop­erty will also be the fastest to re­cover”.

Listed prop­erty can be de­scribed as a hy­brid be­tween eq­uity and bonds, and tra­di­tion­ally its per­for­mance is very closely cor­re­lated to the bond mar­ket. In­vestors get a steady in­come flow that is paid out from the rental in­come earned, while it also of­fers cap­i­tal growth.

In South Africa, where this fund has most of its ex­po­sure, the mar­ket is characterised by es­ca­lat­ing rental pay­ments. In de­vel­oped mar­kets, this is not al­ways the case, and there can be no in­crease in rental in­come over ex­tended pe­ri­ods of time. Mot­tiar likes off­shore ex­po­sure with sim­i­lar char­ac­ter­is­tics as the South African mar­ket, such as pro­vided through its hold­ing in New Europe Prop­erty In­vest­ments (Nepi) that op­er­ates in Eastern Europe. The fund of­fers about 20% off­shore ex­po­sure.

An­other char­ac­ter­is­tic of the Absa Prop­erty Eq­uity Fund is that it is ac­tively man­aged, and they pre­fer to take big po­si­tions in a smaller num­ber of stocks where they have con­vic­tion in the prospects of the com­pany, says Mot­tiar.

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