South Africa's Top Global Listed Property Unit Trusts
13 February 2018 | SA Views | Mark Mayer
 


Two weeks ago we looked at the top two SA-focused property unit trusts. In this article, we shine a spotlight on the South African unit trusts that play in the global real estate sector. With the Raging Bull award winners announced last week, it is with interest that 2017’s best performers were not the same as the best global real estate property fund over three years. Reitway Global won the prize in that respect, and over the five-year period on a risk adjusted basis, Catalyst Fund Managers took top spot.

SA’s best global real estate unit trusts of 2017

Despite the Ramaphosa rally which contributed to the rand’s strength over the course of the 2017 year under review, and the interest rate hiking cycle in the US which makes up almost two-thirds of the global REIT market, the two SA-domiciled global property funds came in with decent returns, albeit with a healthy margin of performance between first and second spot.

The runner-up for 2017 was BCI’s Best Blend Global Property Fund, which returned 8.99%. First for the year was STANLIB’s Global Emerging Market Property Feeder Fund, which finished up 16.6% for 2017.

Considering that the 16 funds in the category (ASISA Global Real Estate General) averaged 1.04%, the returns of the top two were well ahead of the peer group average.

A side-by-side comparison

Next we take a closer look at these two funds, their managers, philosophies, longer track records, and top holdings.

image1

STANLIB’s Keillen Ndlovu

image2

Currently Head of the Listed Property Franchise at STANLIB and Fund Manager of the Global Emerging Market Property FF. 

Mr. Ndlovu started his property career with Standard Bank Properties in 2004, working on a leveraged property product and researching listed property names.

Keillen transferred to STANLIB the following year as a Listed Property Analyst. Upon successfully assuming increased responsibilities and fund management exposure, he was appointed Co-Head of STANLIB’s Listed Property Funds and a full-time fund manager in 2008.

The Listed Property Team at STANLIB has won numerous awards over the past decade, with Keillen regularly contributing in the media, not only as a representative of STANLIB’s funds but also on general listed property topics.

BCI Best Blend Global Property Fund

image3

BCI’s fund is managed by Boutique Investment Partners, who have selected three managers with Global Property expertise. Sesfikile Capital (managers: Evan Jankelowitz, Mohamed Kalla and Kundayi Munzara), STANLIB (manager Keillen Ndlovu) and Reitway Global (manager Greg Rawlins) are all allocated a portion of the fund to manage in an attempt to blend styles and philosophies. In June 2018 they will have produced a three-year track record.

Investment objective

The STANLIB Global Emerging Market Property Feeder Fund seeks to achieve both income and capital growth. Apart from assets in liquid form, it will consist solely of participatory interests in the STANLIB Global Emerging Markets Property Securities portfolio under the Threadneedle (Lux) scheme. The Feeder Fund may also hold financial instruments from time to time, for the exclusive purpose of hedging exchange rate risks.

According to the fact sheet, the Luxembourg-domiciled fund invests at least two-thirds of its assets in shares of real estate companies and REITs (real estate investment trusts) in emerging markets.

The Fund may also invest in asset classes and instruments different from those stated above. The Fund permanently invests a minimum of 75% in emerging markets. The Fund will not invest more than 30% of its assets in the shares of companies that have a market value of less than US$50mil.

According to the fact sheet, the BCI Best Blend Global Property Fund is a global property portfolio with an objective to provide investors with income as well as long-term capital growth. The portfolio may invest in property securities, property-related securities and participatory interests in collective investment schemes in listed property, equity securities, interest-bearing instruments, non-equity securities and assets in liquid form.

The portfolio may also invest in participatory interests or any other forms of participation in portfolios of collective investment schemes or other similar schemes in the Republic of South Africa. The portfolio may from time to time invest in listed and unlisted financial instruments. The manager may include forward currency, interest rate and exchange rate swap transactions.

Extended performance

Given the relatively short history of both funds, where the track record does not yet exist, I have included the best property fund in the same category for the reader’s benefit. Note that all percentage returns over one year are annualised.

It is quite clear that over the longer term, these two funds have more competition. BCI in their best-blend approach incorporate the best fund (Reitway Global) over the three- and five-year period. Catalyst’s fund is a whisker away at only 0.35% behind Reitway on an annualised basis over five years.

image4

The funds’ respective top holdings

image5

Two of STANLIB’s best ideas from their emerging market fund feature in the top five of BCI’s Best Blend fund. The iShares global REIT ETF is also an eye-catching inclusion at number one spot in the BCI version. Perhaps such a large exposure in a passive vehicle is telling. The majority of South African active global property fund managers have underperformed the global indices over the last number of years and the ETF’s inclusion may point to an acknowledgement of this. However, it is worthwhile pointing out that active managers often lag their benchmarks during bull runs, but it is in the bear legs that they often outperform their passive competition.

References:

Image of Keillen Ndlovu from Business Live

http://www.morningstar.co.za/za/funds/snapshot/snapshot.aspx?id=F00000V8T6

http://www.stanlib.com/Institutional/Documents/Brochures/Franchises/16355%20STANLIB%20Global%20Emerging%20Markets%20Property%20Capability.pdf

https://factsheets.threadneedle.com/RetailFundFactSheets/LU1048246844_EN_LU_RETAILFFS.pdf

http://www.fundsdata.co.za/Data/Funds/2906/default.htm?tn=2906&mid=0018&fname=STANLIB%20Global%20Emerging%20Markets%20Property%20Feeder%20Fund&Reg28=N&mp=Y&load=1

http://www.bcis.co.za/upload/factsheet_categories_folders/funds/04%20-%20BCI%20Best%20Blend%20Series/BCI%20Best%20Blend%20Global%20Property%20Fund%20(A)%20BBGPA.pdf

https://www.bloomberg.com/research/stocks/private/person.asp?personId=30030483&privcapId=28140298&previousCapId=7009087&previousTitle=STANLIB%20Asset%20Management%20Limited

cta


mark

Mark Mayer
Investment Specialist at Discovery Invest

Mark graduated with a Business Science Degree from the University of Cape Town in 2007. He then joined Sharenet, during which time he also completed his B.Com Honours through UNISA. Mark has helped to build, launch and manage derivative and share trading brokerage businesses. He is also a JSE Registered Securities Trader, and has worked on the trading desk at Sharenet. After seven-and-a-half years at Sharenet Mark then moved to Reitway Global (a specialist Global Listed Property Fund Manager) where his passion for property was further kindled. Mark currently works for Discovery Invest as an Investment Specialist on their Investec Managed fund offering. He has over ten years of experience in the equity and asset management sector and can be reached at: markm@discovery.co.za

The views and opinions (where expressed) in this article are those of the author and do not necessarily reflect the official policy or position of Discovery Invest.


Disclaimer:
The information contained in this article is for informational purposes only and must not be regarded as a prospectus for any security, financial product or transaction. It is neither to be construed as financial advice nor to be regarded as a definitive analysis of any financial issue. Investors should consider this research/article as only a single factor in making their investment decision. We recommend you consult a financial planner/advisor to take into account your particular investment objectives, financial situation and individual needs. The views and opinions (where expressed) in this article are those of the author and do not necessarily reflect the official policy or position of Sharenet.

Share This Story

 
 
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.
© 2018 SHARENET (PTY) Ltd, Cape Town, South Africa