Summer Listed Property

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Summer Listed Property fund performance summary as at 31 December 2017. 

Fund at a glance

Unit price (as at 31 December 2017): $1.0625

Date the fund started: 19 September 2016

For information on fees, see our Fees page.

Further information can be found in the product disclosure statement

Fund objective and strategy

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

Fund returns

 Annualised total since inception1 Month3 Months1 Year
Fund 5.00% 2.28% 5.88% 12.77%

Fund returns are calculated net of fund charges, trading expenses and accrued tax for a New Zealand resident individual paying tax at the highest Prescribed Investor Rate (28%). 

Top 10 investments

  Asset name % of fund net assets
1 Precinct Properties New Zealand Limited 16.95%
2 Goodman Property Trust 16.68%
3 Kiwi Property Group Limited 16.08%
4 Property For Industry Limited 8.59%
5 Stride Property Group  8.26%
6 Vital Healthcare Property Trust 7.75%
7 ANZ Cash Deposit 7.14%
8 Investore Property Limited 3.95%
9 Westfield Corporation 3.28%
10 Lendlease Group  3.05%

The top 10 investments make up 91.73% of the fund.

Manager's comments

Fund Performance

Summer Listed Property delivered returns of 2.28% for the month, 5.88% for the three months to December and 12.77% for the year.

Market Commentary

The New Zealand listed property sector (represented by the S&P/ NZX 50 Property Gross Index) delivered a respectable return of 6.46% in the December quarter. Nonetheless, the 12.79% return posted by the listed property sector during 2017 was considerably below the 22.04% return achieved by the broader New Zealand equity market (measured by the S&P/NZX 50 Gross Index). There are multiple reasons why the New Zealand equity market has outperformed the New Zealand listed property market for some time now. Firstly, rising interest rates tend to be associated with periods of flat or declining property returns and higher interest rates in the United States have certainly dampened buyer demand. Secondly, the New Zealand property sector has been a very strong performer over a number of years. The three-year compound return is circa 10% p.a. and as a result, we expect a period of consolidation. Thirdly, although the outlook for the New Zealand economy remains robust, we believe that the change in government has left many property investors feeling less confident, particularly with regards to reform of existing tax policies.

Portfolio Positioning

One of the key investment decisions taken by the fund in recent years was a move in 2015 to employ a diversification strategy. This approach included the addition of a number of exposures in the retirement property sector. Purchases also extended to Australian real estate investment exposures such as Westfield and Stockland. During the December quarter we sold all of our listed New Zealand retirement property exposures. The primary rationale for doing this is that we believe the sector is now over-valued. Retirement property is highly correlated with New Zealand residential property values and these also appear extremely expensive, in our view.

Outlook

As mentioned, higher interest rates tend to negatively affect listed property. Consequently, it would be no surprise if the sector was again relatively subdued in 2018. Nonetheless, we believe the property sector is comparatively well positioned for higher rates. Firstly, gearing levels actually fell in 2017, which is very encouraging. Secondly, gross dividend yields remain attractive at circa 7.00% and on its own this should be sufficient to defend capital values. Finally, cash flows remain robust, which is a reflection of strong rental demand. Positive fundamentals such as these will remain intact as long as the New Zealand economy remains on track, in our view.

 

For more information on the Summer Listed Property fund, read the latest quarterly fund update.

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.