NAV on 2018/10/19
|NAV on 2018/10/18
|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 - Jun 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 4.24% for the second quarter of 2018 was an outperformance of both the listed property index and the median manager by 6.43% and 6.57% respectively. We were pleased to see the recovery in the performance of the fund after a disappointing first quarter with the fund continuing to be 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 -2.2%, underperforming Equities (4.5%) and Cash (1.8%), while outperforming Bonds (-3.8%). However, over the longer period, listed property continues to be one of the best performing asset classes returning 15.95% p.a. over the last 10 years, ahead of Equities (9.79%), Bonds (9.75%) and Cash (6.94%).
The second quarter of 2018 could be characterised by a reversal in the positive sentiment post the ANC elective conference in December 2017, which saw a strengthening in bond yields together with improvements in both business and consumer confidence during the first quarter of 2018. We saw the yield on the R186 bond softened during the quarter from 8.0% to 8.8%, which resulted in downward pressure on the valuations of South African focused property companies during the quarter.
The inability of the increases in both business and consumer confidence to translate into improved on the ground activity within the property sector and the overall economy as a whole, is likely to result in a further deterioration of the bottom up fundamentals for the South African focused companies in 2018. This is further supported by the capital allocation decisions of companies within the listed property sector who continue to invest more capital into offshore markets as opposed to the domestic sector. At the end of the second quarter, the sector traded on a projected forward yield of 9.0% with an anticipated growth rate of 6.7% over the next 12 months. However, a positive development during the quarter was the recovery in the share prices of Resilient REIT Ltd (RES) and its associated companies. The share price performance of these companies supported the outperformance of the fund over the quarter with RES (9.2%), Fortress REIT B units (23.5%), Greenbay Properties (24.5%) and Nepi Rockcastle (6.0%) all outperforming the SAPY. The fund remains invested in the group of companies due to the current valuations of the companies relative to the quality of its underlying physical property assets and the sustainable distribution growth outlook over the longer term.
Despite the positive share price appreciation experienced during the second quarter, we see the next set of financial results reported by the group of companies and the broader property sector to be a short term driver of improved confidence in the sector while the regulator continues its investigation of the allegations made against the Resilient group of companies.
The recovery of the performance of the fund on both an absolute and relative basis during the second 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 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.