The Listed Property sector achieved yet another year of strong absolute returns, with Australian and Global REITS generating 15.6% and 4.2% respectively, over the 12 months to 31 May 2016 according to Zenith Investment Partners latest Property Sector Review. This contrasted with other mainstream asset classes, many of which faired less favourably amidst a period of broader market weakness.
Across Zenith’s universe of rated managers, investment outcomes were varied with sector participants citing headwinds that made it incrementally challenging to generate excess returns.
Included amongst these were distortions brought by central bank policy, valuations and issues with benchmark composition.
Sophie Gibbons, Zenith Senior Investment Analyst said “We have observed a greater willingness of AREIT sector participants to use the full breadth of their investment mandates this year, largely in an effort to generate excess returns. These have included the incorporation of developers & contractors, as well as infrastructure and small caps into the investment universe.
Investors need to be aware that these exposures can potentially provide a more varied set of investment outcomes that may not directly reflect the defensive nature of the asset class, thereby impacting total portfolio outcomes”.
Summary of the Zenith 2016 Property Sector Review:
From an initial universe of 84 products:
4 were rated “Highly Recommended”
19 were rated “Recommended”
10 were rated “Approved”
51 were “Not rated”
