Not as safe as houses

A huge gap between the best and worst performers means property unit trust buyers need to pick with care

An eye-popping 57% gap between SA’S bestand worst-performing property unit trust funds underscores just how critical stock-picking has become. And the volatility in what had been a predictably lucrative asset class is also something of a crisis for SA’S property-loving, dividend-hungry investors.

For example, the Meago Enhanced Global Property Prescient Fund, a rand hedge play, produced a 30% total rand return for the 12 months to the end of May, according to Morningstar and the Association for Saving & Investment SA.

In stark contrast, Nedgroup Investments Property Fund’s dismal -27% return over the same time places it at the bottom of the 12month ranking. The fund has 100% exposure to SA, but its performance is still well below the local peer group’s average -10%.

“It’s no longer about simply betting on the index,” says Evan Robins, who runs Old Mutual’s SA Quoted Property Fund.

For instance, the price of Rebosis B shares is down close to 70% over the year to date, while Hospitality Property Fund is up nearly 30% over the same period. Similarly, dividend growth varies from a high of 12% from warehousefocused Equites to a catastrophic -75% from Rebosis B.

Of course, stellar returns by global property unit trust funds have been flattered by the weak rand, which has lost about 13% against the dollar and 9% against the euro and pound in the year to end-may.

But most offshore property markets are also delivering better growth on the back of stronger-performing economies than that of SA.

Analysts say the poor returns generated by most Sa-focused unit trust funds over the past 12 months have to be seen in relation to last