The start of a new year is always an opportune time to take stock of the year that was - and make no mistake, 2017 was a year full of talking points and headlines (some of them fake). Of course, considering that Mr. Trump was sworn in as the American president, nobody should have expected anything different.
The markets on the whole performed well, and from the opinions I have heard, the consensus appears to be that 2018 will be good for markets too. Of course crystal ball gazing (as fun as it may be) shouldn’t be taken too seriously.
The top-two performing SA property unit trusts
In my early engagement with financial professionals since the holiday break, conversations have centred around Cyril Ramaphosa, Moody’s and on a fund level, the best performers of 2017. There have been a number of articles that have shone a spotlight on the best performing funds of last year, (one of which is referenced at the bottom of this piece for your convenience) but this article zooms in on two property funds that did spectacularly well last year.
It is with interest that both funds (top performers in the ASISA Real Estate General category) were also placed in the top 20 unit trust performers over 2017 (see Patrick Cairns’ article referenced at the end).
Source: Morningstar (as published on Moneyweb)
The Absa Property Equity Fund was the 6th best performer (if you exclude the STANLIB Enhanced Yield Abil Retention Fund which produced a return for the year of over 50%. It has been excluded off the following list, however, as it only holds African Bank debt).
The second best SA property fund for 2017 was the Metope MET Property Fund, finishing with 24.08% for the year, and it managed to gain 14th place out of all funds in South Africa.
A side-by-side comparison of SA’s best property funds for 2017
Next we take a closer look at these two funds, their managers, their philosophies, longer track records and their top holdings.
Absa’s Fayyaz Mottiar, CFA
Recently scooping the Raging Bull award for the best South African Real Estate Fund, recording the highest investment return over three and five years on a risk-adjusted basis, Mr. Mottiar is a distinguished asset manager. With financial markets experience spanning 20 years and including work as a derivate trader at Nedcor Investment Bank, he was also part of the equity dealing team at the newly formed Stanlib before becoming a portfolio manager in 2003. In 2007 he joined Absa, where he initially managed the commercial property portfolio of the bank until 2011. It was then that he moved to ABSA Asset Mangement and focused on listed property, and is also currently head of at Absa Asset Management. Mr. Mottiar has a Bachelor of Economic Science degree from the University of Witwatersrand and is a CFA charter holder.
Metope’s Liliane Barnard
Ms. Barnard has over 25 years’ of investment management and listed property experience. She has spent 11 years independently managing institutional pension fund money and was also involved in establishing a joint-venture closed-ended UK property fund. She is no stranger to JSE-listed property companies, where she has served on the board of Emira, Redefine and Pangbourne Properties. Ms. Barnard previously headed up Asset Management at Old Mutual Properties and acted as Head of Old Mutual Asset Managers for 15 years. She is currently both CEO of the Metope Group and is the listed property portfolio manager.
The Absa Fund’s primary objective is to provide the investor with returns and growth over the medium to longer term at medium to high risk, focused predominantly on the South African property market and sector. The majority of its assets will be invested in South African markets and will mainly be invested in securities of a property equity nature, participatory interests that derive income and growth of property nature, as well as non-equity securities.
The Metope Fund seeks to maximise income returns and capital growth over the long-term. Metope utilises in-depth fundamental research of the South African property market and locally listed real estate companies. The team considers macro-economic factors where relevant in identifying compelling opportunities.
The investable universe of the portfolio includes property securities, property collective investment schemes, property loan stock, real estate equity, money market instruments, bonds, fixed deposits and other interest bearing securities, derivatives and assets in liquid form. The portfolio will invest at least 80% of the market value of the portfolio in securities listed in the FTSE / JSE Real Estate industry group or similar sector of an international stock exchange and may include other high yielding securities from time to time.
Given the inception date in February 2015, the Metope Fund will shortly have a 3-year track record. Where the track record does not yet exist, I have included the next best property fund for the reader’s benefit. What is truly remarkable is the consistency of performance over the years by the Absa fund. It is number one across the board, a spectacular achievement.
Very interestingly, Absa has taken advantage of its flexible mandate to place almost 16% of the fund in Absa’s Money Market. They also have almost 6.5% less exposure to NEPI Rockcastle, the top property holding in both portfolios.
Patrick Cairns - The top unit trusts of 2017 - Moneyweb
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: firstname.lastname@example.org
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.