NAV on 2019/01/18
|NAV on 2019/01/17
|52 week high on 2018/01/24
|52 week low on 2019/01/02
|Total Expense Ratio on 2018/09/30
|Total Expense Ratio (performance fee) on 2018/09/30
Absa Fund Managers (RF) (Pty) Ltd.
South African--Real Estate--General
FTSE/JSE Africa SA Listed Property index [J253]
Fayyaz started his financial markets career at Nedcor Investment Bank in 1998 where he worked as an equity derivatives trader. In 2000 he joined SCMB Asset Management’s Equity dealing team and following the merger of SCMB Asset Management and Liberty Asset Management to form STANLIB, he was seconded to set up a new BEE asset management joint venture between STANLIB and SIMEKA, which specialised in tracker funds. In 2003 he joined STANLIB’s fixed interest team as a Fixed Interest Dealer and Portfolio Manager. Fayyaz joined ABSA in 2007 and has been managing the listed property investments of the bank over the last 3 years in the Commercial Property Finance Private Equity division. Fayyaz moved into ABSA Asset Management in 2011 following an internal restructuring and continues to focus on listed property investments. Fayyaz has a Bachelor of Economic Science degree from the University of Witwatersrand and is a CFA charter holder.
Absa Property Equity comment - Sep 18
The Absa Property Equity fund is an active, pragmatic value fund within the property sector. The fund's remarkable historical success is in part attributed to the unconstrained nature of the portfolio which is benchmark aware but not benchmark cognizant. In practice this means that the fund can deviate significantly from the benchmark through the cycle, where opportunities are identified.
Our primary objective is to be invested in the highest quality companies for the long term. The deliberate and active way in which the fund is managed can result in periods of higher volatility relative to the benchmark, to deliver results that are driven by the robust process, and portfolio manager's conviction.
The fund's total return of 4.76% for the third quarter of 2018 was an outperformance of both the listed property index and the median manager by 5.77% and 5.47% respectively. We are pleased to see the recovery in the performance of the fund continue into the third quarter with the fund remaining one of the best performing funds over the long-term. The positive performance achieved by the fund was in contrast to The SA Listed Property sector as a whole which had another negative quarter and delivered a return of -1.1%, outperforming Equities (-2.2%), while underperforming Bonds (0.8%) and Cash (1.7%). However, over the longer term, listed property continues to be one of the best performing asset classes returning 13.45% p.a. over the last 10 years, ahead of Equities (12.10%), Bonds (8.55%) and Cash (6.82%).
The third quarter of 2018 saw a continued deterioration in sentiment within the local economy together with a heightened emerging market risk premium on the back of a strengthening US dollar through rising bond yields and interest rates together with specific risk factors around vulnerable emerging economies with double deficits and large foreign currency debt commitments. Heightened tensions in the global economy through what has been termed 'trade wars' between the USA and China weighed further on emerging market currencies during the quarter.
In light of the aforementioned factors together with the difficult on the ground conditions within the domestic property sector due to the onset of a technical recession, political uncertainty together with weakening business and consumer confidence, the fund had an overweight offshore and cash position going into the third quarter of 2018.
The combination of these factors together with lower than expected growth expectations post the release of results throughout the quarter weighed heavily on valuations across the JSE and in particular the listed property sector where many of the domestic focused companies came under pressure with Growthpoint (-11%), Redefine (-3.8%) and Hyprop (-9.5%) which account for ~44% of the SAPY, reporting negative capital returns during the quarter.
The performance of fund over the quarter benefitted from its limited exposure to domestic focused companies together with the positive performance of direct offshore companies and cash.
At the end of the third quarter, the sector traded on a projected forward yield of 9.9% with an anticipated growth rate of 5.0% over the next 12 months.
The continued recovery of the performance of the fund on both an absolute and relative basis since the end of the first quarter of 2018 provides investors with an example of the robustness and sustainability of our investment process, which provides us with the confidence to remain invested in attractive investment opportunities through periods of significant market volatility. We remain confident that our fund is able to withstand market shocks and is still the correct choice for long term investors.
The fund aims to offer investors medium to long-term capital and income growth through investments in the SA property market, sector listed shares and unit trusts in property.