Concentration issues dog the property securities sector
The property securities sector produced modest gains over the past 12 months, but continues to face volatility and concentration issues, SQM Research has found.
For the year to 31 March, the S&P/ASX 300 A-REIT Accumulation Index reported growth of 1.7 per cent, compared to 4.7 per cent for the previous corresponding 12 months.
During SQM's last review, some fund managers had expressed concerns regarding the concentration of Westfield (41 per cent) in the index. Despite the group's split into two separate entities, the combined entities still form 40 per cent of the benchmark.
"To counter this, some fund managers are increasing their mandate to cover Asian stocks as well as including benchmark-unaware mandates that may restrict maximum investment into such stocks," the report stated.
In addition, some managers continued to be dependent upon sell-side research for their investment mandates, with SQM maintaining a neutral view on this issue.
"However, it must be stressed that if this model is being used, managers should be conducting comprehensive research and assessment on each sell-side view or model that is utilised," the review read.
According to the findings, there was also little evidence to suggest the use of in-house property research and its correlation to outperforming the benchmark.
Recommended for you
A new funds distribution business has launched in Australia, seeking to bring institutional offerings to the wholesale market and led by co-founder of Jamieson Coote Bonds.
Higher interest rates could be on the cards for 2026 after monthly CPI inflation for October showed an increase of 3.8 per cent.
Global actively managed ETF assets hit a record high in October, according to independent research and consultancy firm ETFGI, breaking the record set the previous month.
Federation Asset Management has appointed an investment director and head of responsible investments to support ESG integration strategy across the firm.
