Summer Listed Property fund performance summary as at 31 January 2024.
Unit price (as at 31 January 2024): $1.2935
Date the fund started: 19 September 2016
For information on fees, see our Fees page.
See the Listed Property page for the Summary of investment objective and strategy.
|Total since inception (annualised)
Fund returns are calculated net of fund charges, trading expenses and accrued tax for a New Zealand resident individual paying tax at the Prescribed Investor Rate identified above.
|% of fund net assets
|Goodman Property Trust
|Kiwi Property Group Limited
|Precinct Properties New Zealand Limited
|Vital Healthcare Property Trust
|Argosy Property Limited
|Stride Property Group
|Property For Industry Limited
|Investore Property Limited
|New Zealand Rural Land Company
|ANZ transactional bank account
The top 10 investments make up 87.30% of the fund.
The bellwether New Zealand Government 10-year bond yield ticked up to 4.6% in January but is still 1% off the 5.6% peak in October. After a spectacular rally in November and December the interest rate sensitive NZ REIT (Real Estate Investment Trusts) Index took a pause in January. The Australian REIT sector modestly outperformed NZ, aiding performance for the Octagon Listed Property Fund with around 5% of the fund being invested in Australia.
Compared to peers, NZ Rural Land Co. (NZL) and Summerset outperformed in December, with NZL benefitting from the announcement it has divested a 25% interest in its underlying assets to Australian-based investment manager, ROC Partners. NZL has been a key overweight position in your fund and the external validation of assets and strategy is a positive development. We believe that improving dairy prices and a strong rental growth outlook should help to close the current gap to net tangible assets (NTA). Summerset performed well after reporting a strong set of quarterly sales, signalling stronger earnings at the upcoming result.
Summer Listed Property delivered a return net of fees and before tax of -0.25% for January. For the 12 months to 31 January the fund delivered a return net of fees and before tax of 2.66%.
Positive performance came from our overweight position in NZL, and underweight positions in Goodman Property Trust and Precinct Properties. Detractors to performance were our underweight position in Property for Industry and Argosy Property.
We actively manage the fund’s foreign currency exposures. As of 31 January 2024, these exposures represented 5.82% of the value of the fund. After allowing for foreign currency hedges in place, 3.76% of the value of the fund was unhedged and exposed to foreign currency risk.
The late 2023 rally in the Real Estate sector was largely interest rate driven, with limited stock-specific news flow during the period. Despite this fall in bond yields, the risk premium to bond yields offered by real estate is still low by historical standards and sector valuations are vulnerable to any move back up in rates from here. We expect further cap rate softening for the companies reporting at March year-end and possible capital raises in some of the more highly geared NZ names.
There is some valuation support on the basis that the sector still trades at a discount to NTA. Key risks to the downside include weakening economic activity seeing rental growth slow and/or vacancies rise. Interest rate movements in either direction are likely to drive much of the sector’s short-term performance. We continued to selectively add NZ and Australian real estate and retirement village stocks during the month however remain wary about the potential for a final round of capital raises in pure real estate names late in the cycle.
This is not a recommendation to buy or sell any financial product and does not take your personal circumstances into account. All opinions reflect our judgement on the date of communication and may change without notice. Past performance is not a reliable guide to future performance. We recommend you take financial advice before making investment decisions. We have prepared this web page in good faith based on information obtained from other sources, but we do not guarantee the accuracy of that information. We do not make any representation or warranty (express or implied) that this web page is accurate, complete, or current and to the maximum extent permitted by law disclaim any liability for loss which may be incurred by any person relying on this web page.