Researcher Adviser Edge has awarded the RREEF Global (ex Australia) Securities Fund 4.75 stars in its first report on the property sector, the highest rating.
The companion fund, the RREEF Global Property Securities Fund rated 4.5 stars.
Adviser Edge head of property research Louis Christopher said the two funds’ high scores were influenced by their strong returns since inception, which were continually above their peers.
“A strong management team and process as well as access to extensive in house research also influenced the strong rating given to the funds,” he said.
The BT Wholesale Global Property securities fund also scored 4.5 stars while the AMP Capital Global Property Securities Fund was rated 4.25 stars.
In all, six funds scored four stars and above while six scored three stars and above.
The UBS Global Property Securities Fund achieved a 2.5 star rating, which was the lowest.
Christopher said there were several factors that contributed to the rating despite the fund manager having a “well-qualified” investment team.
“The fund’s rating was negatively influenced by the turnover in the investment team during the past two tears, which represents a major risk going forward,” he said.
“Also, returns both on an absolute 12-month rolling basis and risk-adjusted basis (as measured by the Sharpe Ratio) have significantly underperformed the peer average of those funds under review.”
The report said the property securities market will have a difficult year ahead in light of the US sub-prime crisis.
“Highly-leveraged property securities, especially those who utilise short-term debt, will find significantly increased margins on those funds that they can borrow,” Christopher said.
“Also vehicles that exhibit lower credit ratings and need debt refinancing will find it hard to obtain funding in the current market conditions in light of the credit crunch.
The ability of property securities managers to identify investments least affected by the credit crunch will be the key to success during the year, he said.
“The reality is that there have been few places to hide for portfolio managers, other than through increased fixed interest cash holdings,” Christopher said.
“An economic slowdown of the global market is expected to negatively affect REITs going forward, with demand for the underlying commercial property assets already showing signs of easing.”
The Adviser Edge Global Property Securities Fund Sector Review 2007-8 is also being made available to van Eyk subscribers as part of the strategic alliance between the two researchers.
