Professional Planner|Zenith Fund Awards 2015 – Australian real estate investment trusts (AREITs)

Winner: Cromwell Funds Management

Zenith says: Zenith’s conviction continues to be predicated on the long-standing working relationship between the two key investment personnel, Stuart Cartledge and Richard Fakhry, who employ a robust and detailed investment process. Cromwell utilises an active, value-biased investment approach, which is consistently applied across its expanded investment universe. Over a range of time periods, Cromwell Phoenix has consistently generated outperformance relative to the median manager and Zenith’s assigned benchmark.
– Sophie Gibbons, investment analyst

Zenith sector review: The Australian REIT sector remains a competitive space with a large range of active and benchmark-aware offerings. The past 12 months have seen another year of strong returns, especially relative to the broader market. While all active managers have displayed strong absolute performance, the majority of active managers have struggled to outperform the benchmark, which is in contrast to the alpha traditionally generated by active managers over the longer term.

Michael Blake, head of funds management, Cromwell Funds Management (pictured): The great thing about A-REITs is that they’ve got very consistent, predictable income, and so where we saw the mining stocks with that uncertainty around earnings, whereas with A-REITs collecting rents and they’ve got long-term leases in place, they’re offering a pretty stable income stream, and that’s what’s helping them outperform in this market. We’re a value manager, looking at bottom-up cash flow, so we’re always looking for stocks that have got solid earnings, and we have a very in-depth analysis of every stock, which gives us a very good forecast of earnings in-house.

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