NAV on 2019/12/06
|NAV on 2019/12/05
|52 week high on 2019/02/06
|52 week low on 2019/08/15
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
Absa Fund Managers (RF) (Pty) Ltd.
South African--Real Estate--General
FTSE/JSE Listed Property Index (J253T)
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 Smart Alpha Property Comment - Mar 19
The Absa Smart Alpha Property Fund has embarked on a change in strategy during the fourth quarter of 2018, with the fund moving from a quantitative strategy to a bottom-up process driven by fundamental research and active portfolio management based on potential absolute returns and relative valuations. The mandate of the fund is to outperform its benchmark while managing the active risk within specified limits.
The fund aims to maximise investors potential total return over the medium to long term through enhanced exposure to companies that provide sustainable income together with growth in income which support capital growth over time, while limiting exposure to companies that produce sub-standard returns and potential capital loss. The fund will also look to actively take advantage of relative pricing opportunities within the listed property sector.
Due to the changes of the fund, the fund is in the process of migrating its benchmark from the SAPY to the All Property Index in line with sector peers. the All Property Index provides investors with a larger investment universe without the limitations on constituents that the SAPY currently has in place.
The fund's total return of 1.0% for the first quarter of 2019, with the fund delivering -4.7% over a 12-month period, which was an outperformance of both the listed property index and the median manager by 1.0% and 2.0% respectively. The SA Listed Property Index as a whole delivered a return of 1.5% for the quarter, underperforming Equities (8.0%), Bonds (3.8%) and Cash (1.7%). However, over the longer term, listed property continues to be one of the best performing asset classes returning 12.4% p.a. over the last 10 years, behind Equities (14.0%) and ahead of Bonds (8.7%) and Cash (6.6%).
Towards the end of 2018 and the beginning of 2019, rising concerns around slowing global growth were met by a more dovish tone from global central bankers, particularly the US Fed. This saw a strong recovery in the property sector early in the quarter as the 'search for yield' investment theme returned to the fore as global bond yields declined on the back of a 'lower for longer' expectation of global interest rates. However, this recovery was short lived as domestic issues came to fore, with uncertainty around the potential outcome of the General Election in early May together with Eskom implementing rolling blackouts putting further strain on already soft economic environment. The impacts of the power shortages have already been felt with economic growth expectations already being revised down for the domestic economy in 2019, with further risks to the downside.
Reported results continue to show a deterioration in conditions within the listed property sector with a higher number of companies now expecting lower than expected growth in income over the next financial year. We expect the trend of negative reversions, lower escalations and elevated vacancies to continue throughout 2019. A trend we have seen emerging during the reporting period this quarter has been management teams improving the quality of income distributed together with a focus on de-leveraging and improving the quality of their balance sheets at the expense of distribution growth.
Further impacting the sentiment towards the property sector was the Edcon recapitalisation, which would put additional pressure on what was already a benign growth outlook in 2019. While the potential for rental reductions had already become public knowledge in December 2018, the details over a practical implementation dragged into 2019 with finality only achieved towards the end of the quarter.
The sector continues look attractive on a valuation basis, offering a high single digit forward income yield with inflation like growth over the next 12 months, which provides an attractive potential total return profile.
The Absa Smart Alpha Property Fund will be actively managed and will invest directly in individual property securities, however individual exposure can be gained from time to time to ensure efficient portfolio management.
The Absa Smart Alpha Property Fund will invest in listed South African property stocks with the intention of adding alpha to the Property index.
This fund is a quasi-passive fund which invests in securities predominantly through indices whilst generating Alpha using quantitative asset allocation techniques.
Securities to be included in the Absa Smart Alpha Property Fund will consist of non-equity securities, financial instruments only in the form of warrants, property equity and property-related securities listed on exchanges, securities listed in the Real Estate Sector on South African exchanges and property shares, property loan stock and participatory interests in Collective Investment Schemes in Property listed on South African exchanges. Non-equity securities in the currency of a country other than the Republic of South Africa, may only be included in this portfolio of it complies with an international rating equal to A or higher from Standard and Poor's and/or Moody's Investor Services Ltd, and /or Fitch Ratings Limited provided further that if the grading of an instrument differs between these rating agencies, the lower of the ratings will apply.
Apart from the above securities, the Absa Smart Alpha Property Fund may also include participatory interests of collective investment schemes registered in the Republic of South Africa or any other form of participatory interests of collective investment schemes or similar schemes operated in territories with a regulatory environment which is to the satisfaction of the manager and trustee of sufficient standard to provide investor protection at least equivalent to that in South Africa and is consistent with the investment policy.