In an absolute sense the global REIT sector has performed well over the past 12 months, with the sector benefiting from investors’ search for yield and the actions of central banks and governments globally. Pleasingly, Zenith notes that a number of the global REIT managers have moved to increase the level of active risk in their funds. This active risk has primarily been assumed at the stock level, with the majority of managers continuing to be closely guided by the regional and in some cases sector weights of indices. Despite the above-mentioned positive, Zenith also notes the high level of investment staff turnover that has plagued participants within Zenith’s global REIT sector over the past couple of years. Zenith has witnessed a domino effect across the sector as analysts, portfolio managers and entire investment teams have moved from firm to firm.
Winner: UBS Clarion Global Asset Management (Australia) Ltd (UBS Clarion)
Zenith says: The UBS Clarion global property securities capability is managed by CB Richard Ellis Clarion Securities. In Zenith’s view, the capability is managed by a high-calibre investment team, further enhanced by the significant resource capabilities of CB Richard Ellis. CBRE Clarion has one of the largest investment teams dedicated to the management of global REITs, providing a point of difference for the capability in comparison to its global peers. The investment team comprises a total of 35 dedicated investment professionals and is led by T Ritson Ferguson (managing director, CIO), who has more than 25 years’ investment experience. In Zenith’s view, the investment process is well structured, including a fully integrated portfolio construction and risk management process. All stock selection and portfolio construction decisions are discussed and determined by the Global Investment Policy Committee (GIPC). After establishing a macroeconomic outlook, the GIPC determines the active regional weightings. Bottom-up stock fundamentals are then assessed to identify quality stocks, which generate above-average cash-flow yield for an expected level of growth.
Interview:
The UBS Clarion Global Property Securities Fund is managed by CBRE Clarion’s global research team of more than 80 dedicated professionals located in offices in the United States, Hong Kong, Japan and Australia. It also has access to insights from a broader network of more than 35,000 real estate brokerage and investment professionals worldwide.
The team’s bottom-up approach includes property visits, management meetings and financial modelling to identify real estate which is undervalued and attractive, placing an emphasis on analysing countries and property sectors experiencing the strongest fundamentals.
According to Justin Pica, portfolio manager for the CBRE Clarion fund, the team’s longevity in the industry, local presence and knowledge, and partnership with UBS are key success drivers.
Over the past year, the fund has benefited from its overweight position in Australian stocks and Tokyo’s office market and industrial logistics.
It is currently cautious on companies in Hong Kong and Singapore with material residential exposure.
“Our key preferred themes include Japan, where government policies are spurring corporate confidence, and the United States, where an improving growth outlook bodes well for companies with cyclical property sector exposure,” Pica says.
“Australia remains one of the highest-yielding developed REIT markets globally and we maintain a portfolio bias toward securities with unique business models which can drive above-average cash-flow growth.”
The fund returned 11 per cent for the year to September 30, 2013, slightly underperforming its benchmark, the UBS Global Real Estate Investors Net Return Index (hedged to AUD), which returned 11.75 per cent.
– Leng Yeow
Finalists
– AMP Capital
• Undertaken a significant level of positive change in recent times, enhancing the capabilities of the investment team.
• Utilises a relatively systematic framework for portfolio construction and risk management.
• Led by a high-calibre global portfolio manager in Matthew Hoult.
– Resolution Capital
• Strong long-term performance history.
• Offers a truly benchmark-unaware exposure to high-quality REITs.
• Resolution has a strong investment team led by four highly experienced portfolio managers.
