Portfolio role of commercial property trusts changing – S&P
Investors should reassess their commercial property holdings as stable and tax efficient investment vehicles on the back of falling yields, according to a new report from Standard & Poor’s.
Its “Asset Allocation: Standard & Poor’s Economic and Investment Market Strategy Report” said the falling yields are occurring in tandem with a growing correlation between LPTs [listed property trusts] and equities as a result of increased (LPT) investor reliance on relatively high dividend yield growth.
“This has important implications for the diversification benefits of holding commercial property,” said Standard & Poor’s director of investment consulting, Simon Ibbetson.
He added that commercial property trusts are now more vulnerable to increases in short-term interest rates, meaning they are unlikely to provide the same degree of inflation proofing.
“Consequently, investors need to view global LPTs as more growth-orientated investments, and favour active managers focusing on property securities in newer markets.
“These markets are more likely to provide reasonable yields, opportunities for capital appreciation, and lower levels of correlation with Australian and US GDP growth.”
Recommended for you
Sydney-based alternative fund manager East Coast Capital Management has formed its first advisory council as it enters its next phase of growth.
With 40 per cent of advice practices looking to increase their ETF usage, the next frontier being embraced is smart beta ETFs with flows doubling in July, providers have said.
Australian ETFs saw flows of $5.8 billion in July, more than double the previous month, and adviser adoption is tipped to help total flows reach $50 billion by the end of the year.
Pinnacle’s London affiliate, Life Cycle Investment Partners, has secured over $15 billion in FUM in its first year and achieved profitability, the firm’s fastest affiliate to do so.
