Top-performing real estate unit trusts
PROPERTY: KEEPING IT REAL, AND MORE SO BY THE DAY
As more real estate companies have listed on the JSE, managers have been able to build portfolios looking quite different to the index and thereby generate outperformance.
Over the last 20 years listed property has moved from being an alternative asset class to one that most investors consider an important part of their portfolios.
As investors came to better understand property’s ability to produce income as well as capital growth, they’ve grown increasingly comfortable with investing in property portfolios. SA’s first property unit trusts were launched in 2002.
At the end of 2002 there were six funds with assets of just under R2 billion. Now there are 56 funds holding R76 billion.
According to the latest LongTerm Perspectives study by Old Mutual’s MacroSolutions boutique, listed real estate delivered an annualised real return (above inflation) of 15.1% per year between start 2002 and end 2016.
Refer to table 1 Table 1: Top performing SA real estate funds to May 31 2017
These funds all outperformed the listed property benchmark; historically not easy to achieve.
As the sector is so concentrated and has a high number of smaller, illiquid stocks, it’s been difficult for active managers to add a great deal of value.
However, as more real estate companies have listed on the JSE, managers have been able to build portfolios that look quite different to the index and thereby generate outperformance.
The Absa Property Equity Fund stands out as the leading performer over this period.
Plexus Wealth’s offering has shown impressive returns relative to the sector average. Its portfolio isn’t quite as bold as Absa’s – Nepi, Fortress and Redefine are its top holdings – but the managers have still moved away from an overly benchmark-cognisant approach.
Refer to table 2 Table 1: Top performing SA real estate funds over ten years to May 31 2017
This article was first published in July’s Moneyweb Investor at investor.moneyweb.co.za