Zenith’s analyst team were particularly buoyed not only by the Global REIT sector generating stronger absolute returns than the previous year, but pleasingly those global managers having more success in outperforming the benchmark, in what has historically proven to be a challenging sector. Those funds also which remained currency unhedged benefitted strongly from the prevailing currency tailwinds.
This was undertaken during the 12 month period when, Zenith re-assessed its nominated benchmark for the Property-Global Securities Sector, after the April 2015 retirement of the UBS Global Investors Index.
Disappointingly, in respect of Australian REIT managers, the Report found while still posting good absolute returns, it was more difficult to find many managers outperforming the index.
Lead Analyst, Jonathan Baird said “Zenith observed that while rated global property managers have historically had difficulty generating meaningful levels of outperformance relative to Zenith’s assigned benchmark, pleasingly, all of the active global property managers on Zenith’s APL outperformed Zenith’s assigned benchmark over the past 12 months.
Overall, Zenith observed that despite the strong overall performance of the sector, a large number of Zenith’s rated domestic and global managers generated sizeable outperformance. Going forward, after discussing the outlook for the sector, many managers believe that in light of rising US interest rates and a diminishing valuation tailwind, increasingly challenging environment will predicate the need for prudent and skilled active management.”
This year Zenith assessed the level of active risk and portfolio concentration assumed by global managers. Baird noted “pleasingly global managers have increased the level of active risk in portfolios with managers more prepared to invest in smaller names or take off-benchmark positions.”
Summary of the Zenith 2015 Property Sector Review
From an initial universe of 80 Property products: 4 were rated “Highly Recommended”; 20 “Recommended” and 9 “Approved”.
Source: Zenith
