A-REITs hunkering down in 2012
"Boring is the new black" for A-REIT fund managers as they look to recover from a contraction in the sector in calendar year 2011, according to Standard & Poor's Fund Services.
S&P's 2011/12 Australian Property - Listed sector report found that A-REITs are "generally more conservative, with stronger balance sheets, less reliant on equity-like cashflow sources, and have lower exposure to offshore real estate".
There is also a greater reliance on rental cashflows and "more sustainable dividend payout ratios", according to the report.
S&P fund analyst Peter Ward said A-REIT fund managers are well positioned to take advantage of other sector changes, including corporate activity.
A-REITs may also be looking to divest non-core real estate assets and instigate share buybacks to improve shareholder value, Ward said.
"Sector headwinds prevail, however, with ongoing global macroeconomic issues contributing heavily to an uncertain investment environment," he added.
The S&P/ASX 300 A-REIT index returned a disappointing -1.56 per cent for the year to 31 December 2011, according to the report.
The report analysed 15 headline funds, two of which - BT Property Investment Wholesale Fund and BT Property Securities Wholesale Fund - received S&P's first five-star ratings in the A-REIT sector in over five years.
AMP Capital and UBS Global Asset Management saw their funds placed 'on hold' following investment team changes.
Recommended for you
The use of total portfolio approaches by asset allocators is putting pressure on fund managers with outperformance being “no longer sufficient” when it comes to fund development.
With evergreen funds being used by financial advisers for their liquidity benefits, Harbourvest is forecasting they are set to grow by around 20 per cent a year to surpass US$1 trillion by 2029.
Total monthly ETF inflows declined by 28 per cent from highs in November with Vanguard’s $21bn Australian Shares ETF faring worst in outflows.
Schroders has appointed a fund manager to its $6.9 billion fixed income team who joins from Macquarie Asset Management.
