Summer Listed Property

Summer Listed Property fund performance summary as at 31 May 2022.

Fund at a glance

Unit price (as at 31 May 2022): $1.3449

Date the fund started: 19 September 2016

For information on fees, see our Fees page.

For more information on the Summer Listed Property fund, read the latest quarterly fund update and the product disclosure statement

Fund objective and strategy

See the Listed Property page for the Summary of investment objective and strategy.

Fund returns

PIR Total since inception (annualised) 1 Month 3 Month 1 Year 3 Years^
28% 5.48% -6.62% -7.82% -8.14% 2.62%
17.50% 5.69% -6.61% -7.79% -8.00% 2.79%
10.50% 5.83% -6.61% -7.77% -7.91% 2.91%

  ^ 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.

Top 10 investments

  Asset name % of fund net assets
1 Goodman Property Trust 15.33%
2 Kiwi Property Group Limited 13.77%
3 Vital Healthcare Property Trust 11.57%
4 Precinct Properties New Zealand Limited 10.78%
5 Stride Property Group  7.76%
6 Argosy Property Limited 7.54%
7 Property For Industry Limited 7.30%
8 Investore Property Limited 3.79%
9 ANZ transactional bank account 2.77%
10 New Zealand Rural Land Company 2.76%

The top 10 investments make up 83.37% of the fund. 

Manager's Commentary

Market Commentary

May saw a continuation of themes from the first four months of the year, other than in the fixed interest markets. As global growth faces headwinds from inflation and central banks raising short term rates, the market is increasingly thinking about the risk of a recession. If a recession does occur, longer term interest rates would probably need to fall, and hence the fixed interest market is now in a “tug of war” between high inflation and increased recession risk. These continued headwinds to economic growth saw equity markets generally deliver negative returns over May.

In May the Reserve Bank of New Zealand (RBNZ) raised rates 50 basis points to 2%. The Monetary Policy Committee argued that the risk of too little-too late was worse than too much-too soon and has agreed to ‘briskly’ lift the OCR until CPI is in the target range. Inflation concerns and sharply increasing interest rates continued to negatively impact interest rate stocks (including property) that are perceived as less attractive.

Portfolio Performance

Summer Listed Property delivered a return of -6.62% for the month of May and for the 12 month period to date delivered a return of -8.14%.

Key contributors to outperformance over the month were underweight positions in New Zealand names Precinct Properties, Property for Industry, and Goodman Property Trust and not owning Winton Land as concerns around its residential development prospects continued. Detractors from performance came from overweight positions in Charter Hall Group, Lendlease, and Centuria Industrial REIT whilst a modest out of index position in Fletcher Building also cost performance.

Outlook

Valuation wise, evidence of higher interest rate expectations are starting to affect demand and pricing for real estate assets as buyers return expectations move higher. The risk of downside to global growth may give purchasers a reason to question some of the more lofty expectations for rental growth.

Of course the listed sector is forward looking, and following recent underperformance versus the broader market, value may be beginning to emerge in the New Zealand property sector. The NZ sector is trading at a 20% discount to NTA (having traded as high as a 15% premium not so long ago, share prices have come back, and more asset revaluations have been booked). Disciplined capital management will be required. At current borrowing rates, most property acquisitions destroy value and equity raises at discounts to NTA do too. Rents will be required to rise fast enough to offset increasing interest costs and despite large under-renting, historically this has been hard to capture in NZ.

NZ is likely further through its interest rate tightening cycle than Australia and as such we continue to lighten our exposure to Australia closing our underweight in New Zealand real estate names.

Locally we continue to favour New Zealand Rural Landco and continue to close our underweight in Vital Healthcare Property Trust with both well positioned to the see the benefit of the of their CPI-linked leases (albeit we would have preferred to see both with a higher hedged interest rate book).

We actively manage the fund’s foreign currency exposures. As at 31 May 2022, these exposures represented 10.49% of the value of the fund. After allowing for foreign currency hedges in place, 6.28% of the value of the fund was unhedged and exposed to foreign currency risk.

 

 

 

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.