Which region did REITs perform best in?
Heavy investment in North American real estate investment trusts (REITs) helped most of the best performers in the global property sector, as it provides a “safe haven” during the US/China trade war.
According to FE Analytics, the ACS Property – Global sector returned 17.41% from the year to 30 November 2019.
The best performing funds were CFS Wholesale Geared Property Securities (45.67%), APN Asian REIT (34.8%), Dimensional Global Real Estate Trust (27.94%), BetaShares AMP Capital Global Property Securities Unhedged (27.65%) and Resolution Capital Global Property Securities Unhedged II (26.59%).
The CFS Wholesale Geared Property Securities fund had a drop of almost 20% last December, but had since rebounded to the top of the sector.
The top holdings were Invitation Homes, Health Care Property Investors, Prologis, Americold and Unite Group, as at 31 August, 2019.
North America dominated their regional weightings (62.02%), followed by Europe (10.97%), Japan (9.25%), UK (9.11%), and 3.59% in Australia.
The top holdings for APN Asian REIT were Ascendas Real Estate Investment Trust (5.6%), Mapletree Commercial Trust (4.27%), GLP J-REIT (3.9%), Japan Retail Fund Investment (3.82%) and Mapletree Logistics Trust (3.57%), as at 30 November, 2019.
They were regionally weighted in the Pacific Basin (50.33%), Japan (39.07%), Australia (4.31%), New Zealand (1.66%), Europe excluding UK (1.37%) and UK (0.59%).
Dimensional’s top holdings were American Tower Corp (4.7%), Goodman Group (2.94%), Crown Castle International (2.78%), Prologis (2.67%) and Scentre Group (2.53%), as at 31 October, 2019.
Their regional weightings were in the US (55.34%), Australia (15.78%), Japan (9.51%), UK (4.24%) and Singapore (3.17%).
BetaShares/AMP Capital top holdings were Prologis (4.46%), Welltower (3.35), Alexandria Real Estate Equities (3.25%) Mitsui Fudosan (3.23%) and Avalonbay Communities (2.77%), as at 30 September, 2019.
Their weightings were North America (58%), Asia (20%), Europe (15%) and Australasia (6%).
Resolution Capital’s top holdings were Equity Residential (6.63%), Prologis (6.4%), HCP (6.39%), Alexandria Real Estate (4.43%) and Vonovia (4.01%), as of 31 October, 2019.
In their market commentary, AMP Capital said listed real estate markets had been broadly supported as investors sought safe-havens due to US/China trade war concerns.
“Global listed real estate markets are likely to be further impacted by short-term volatility that is affecting all risk assets, while investor focus remains on trade tensions, geopolitical uncertainty and concerns about slowing economic growth,” it said.
“However, listed real estate plays a defensive role in portfolios and is therefore likely to remain well supported while volatility is high.”
They mentioned most global growth, which was supported by historically low interest rates, had led to a situation for global listed real estate to deliver solid medium-term returns.
“When there is a fall in the risk-free rate because central banks around the world are loosening their monetary policy, investors often turn to listed real estate as a reliable alternative for yield and a defensive asset class.”
Chart 1: Best performing ACS Property – Global funds from 30 November, 2018 to 29 November, 2019.
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