SQM Research has analysed six funds as part of its 2016 Global Property Securities Fund Review.
The six funds rated that form part of this report are: BT Wholesale Property Securities Fund, Principal Global Property Securities Fund, Resolution Capital Global Property Securities, Invesco Wholesale Global Property Securities Fund and APN Asian AREIT Fund and Premium Asia Property Fund.
Three funds rated as part of the global property securities fund maintained the ratings received in June 2015. BT Wholesale Global Property Securities Fund received the highest rating of 4½-stars, unchanged from the previous year. Resolution Capital Global Property Securities Fund received the second highest rating of 4¼-stars, unchanged from last year. Principal Global Property Securities Fund maintained its 4-stars rating. The Invesco Wholesale Global Property Securities Fund was previously rated by SQM Research in 2011. For the 2016 review the fund received a 3¾-stars rating.
APN Asian REIT Fund maintained a rating of 3¾-stars with a positive outlook. SQM Research will continue to monitor the impact of the integration of the investment team into the Melbourne office and the Fund’s relative and absolute performance over the coming year. Premium Asian Property Fund was last rated by SQM Research back in 2012, it received 3¾-stars rating for 2016.
Market Outlook
The spread between yields on property and government bonds remain elevated despite low property yields. In the medium to long term, higher interest rates have the potential to narrow spreads and drive cap rate pressure upwards. However as inflationary expectations continue to fall, worldwide, a higher interest rate environment seems increasingly more distant.
Overall, SQM’s expectations for the remainder of 2016 and 2017 is for outperformance of higher beta REITs, yet underperformance of fund managers who maintain the view that risk free rates will rise due to potential inflationary pressures.
