NAV on 2018/08/13
|NAV on 2018/08/10
|52 week high on 2017/12/29
|52 week low on 2018/07/26
|Total Expense Ratio on 2018/06/30
|Total Expense Ratio (performance fee) on 2018/06/30
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 - Mar 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 managers conviction.
The fund's total return of -34.54% for the first quarter of 2018 was an underperformance of both the listed property index and the median manager by 14.93% and 16.19% respectively. While this is disappointing to us in the short-term, the fund still continues to be one of the best performing funds over the long-term. The SA Listed Property sector as a whole had a torrid first quarter and delivered a negative return of -19.61%, underperforming Equities (6%), Bonds (8.1%) and Cash (1.8%). However over the longer period, listed property continues to be one of the best performing asset classes returning 13.81% p.a. over the last 10 years, ahead of Equities (10.14%), Bonds (9.41%) and Cash (6.98%).
Looking at the situation before the de-rating in the sector at the end of the 2017, the listed property sector traded on a historical yield of 6.26% and a projected forward yield of 6.73%. At this time the outlook for the sector on the domestic front was negative with a subdued economic backdrop and political uncertainty. The ruling party's December elective conference however marked a change in sentiment towards South Africa.
Going into the first quarter of 2018, the property sector de-rated with the bulk of the downward price pressure being focused on Resilient REIT Ltd and its associated companies. The Steinhoff failure was still weighing heavily on the market and rumours around a report by Viceroy on Resilient and its associates impacted them negatively.
This group of companies made up 42.3% of the property sector at the end of 2017. Our fund's exposure to these counters at the end of December 2017 was 44.4%. The fund was in the process of reducing its holdings in both Nepi Rockcastle (NRP) and Greenbay Properties (GRP) on the back of valuations. Nepi was reduced from a peak of over 20% to a 13.3% exposure at the end of December (3% underweight relative to the benchmark). The Greenbay position was cut from 10% to 7.7%. We continued to hold the 2% overweight position in Resilient (RES) for tactical reasons as it had just been included in the FTSE/JSE ALSI40 index. The intention was to reduce this position as the index funds pushed the prices higher. We continued to hold close to 10% in Fortress (as we have done for a number of years) as we believe the long-term prospects for this company are one of the best on offer.
On 12 April 2018 we issued an investor update to certain of our clients, in which we expressed a view on the allegations against the Resilient Group of Companies and how the reaction thereto, has impacted on the healthy price determining ability for these property instruments. We do note and respect however, that certain market participants may not agree with our views which is well allowed; We believe that certainty in the property sector will return once the regulator has finalised its investigation of the allegations made against the Resilient group.
Q1 2018 was clearly an interesting time for all market participants, extreme market stress and volatility offer opportunities for fund managers to test whether their processes are sound and sustainable. We are confident that our fund is able to withstand market shocks and is still the correct choice for long term investors as the numbers show.
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.