Focus on value puts Pendal atop property securities podium

17 May 2019
| By Hannah Wootton |
image
image
expand image

Striving for value was key to the Pendal Property Securities Fund’s success over the last year, and its success in doing so saw it take out the Money Management Fund Manager of the Year award in the Australian Property Securities category.

When asked what drove the fund’s performance in the past 12 months, Pendal’s head of listed property, Pete Davidson, said: “Our focus on having a valuation toolkit, [and] using a variety of valuation measures meant we could identify value in stocks that had strong equity-style valuation”.

Within this, Davidson noted that in the last year traditional NTA-based stock valuation had lagged, with many NTA-supported stocks becoming value traps rather than traditional value.

Drilling down into where value could be found, the Pendal Property Securities Fund’s strong performance in the last year was supported by overweight allocations in funds managers, industrial and logistics stocks, with falling bond rates supporting the fund managers.

Davidson said that underweights to traditional mall retail assisted the fund’s performance, as these stocks were impacted by Australia’s weakening macroeconomic environment. He believed that this under-allocation would continue to support the fund going forward, suggesting that asset value in the sector would decline in the coming year.

Interestingly, a finalist in the category, the Charter Hall Maxim Property Securities Fund, was also underweight to retail, which Charter Hall head of listed securities, Winston Sammut, also found key to the fund’s success.

“From a top down perspective, we took the view early on that the retail environment was going to be difficult, particularly in the discretionary retail sub-sector, coupled with concerns relating to the residential market,” Sammut said, with the fund weighting its portfolio accordingly.

The Legg Mason Martin Currie Real Income Fund’s, portfolio manager, Ashton Reid, was optimistic about the strength of the Australian property securities sector in general going forward.

“The underlying growth in income of the Real Income Fund holdings remains population growth,” he said.

“Australia has very strong population growth in a global context, and the leverage that real assets have to this strong population growth provides a long-term sustainable income growth opportunity that few other asset classes can match.”

Read more about:

AUTHOR

 

Recommended for you

 

MARKET INSIGHTS

sub-bg sidebar subscription

Never miss the latest news and developments in wealth management industry

Squeaky'21

My view is that after 2026 there will be quite a bit less than 10,000 'advisers' (investment advisers) and less than 100...

1 week 1 day ago
Jason Warlond

Dugald makes a great point that not everyone's definition of green is the same and gives a good example. Funds have bee...

1 week 1 day ago
Jasmin Jakupovic

How did they get the AFSL in the first place? Given the green light by ASIC. This is terrible example of ASIC's incompet...

1 week 2 days ago

AustralianSuper and Australian Retirement Trust have posted the financial results for the 2022–23 financial year for their combined 5.3 million members....

9 months 2 weeks ago

A $34 billion fund has come out on top with a 13.3 per cent return in the last 12 months, beating out mega funds like Australian Retirement Trust and Aware Super. ...

9 months ago

The verdict in the class action case against AMP Financial Planning has been delivered in the Federal Court by Justice Moshinsky....

9 months 2 weeks ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND