Lonsec upgrades Quay Global Real Estate Fund to ‘Recommended’

From

Chris Bedingfield

Lonsec has awarded a ‘Recommended’ rating to the Quay Global Real Estate Fund. The fund is an unhedged global property securities strategy managed by Quay Global Investors which aims to deliver a return of CPI plus 5 per cent a year over five plus years. Since inception[1] the Fund has delivered a total annualised return of 16.7% to May 31 2017.

The ‘Recommended’ rating indicates that Lonsec has strong conviction the financial product can generate risk adjusted returns in line with relevant objectives.

In its report, Lonsec said it considers the experience and track record of the portfolio management team to be highly impressive.

“The rating upgrade reflects increased conviction in the capabilities of the impressive, albeit small, investment team and the merits of the Fund’s highly focused research and portfolio construction approach.

“The Fund is managed by a pair of experienced and high quality real estate professionals in Justin Blaess and Chris Bedingfield.

“The two portfolio managers are highly motivated and their interests are strongly aligned with end investors via a majority stake in the Quay funds management business and significant personal investments in the Fund.

“Alignment of interests between portfolio managers and investors is considered strong in a peer group where some funds could be accused of being too index-aware to warrant their active management fees. Accordingly, the high Tracking Error and Active Share of this product is appealing.”

Lonsec also said: “The investment process is highly differentiated from peers in several ways, with Quay seeking to identify companies with strong management and growth potential. There is also a thematic element, which again tends to be mostly based on sectoral growth. As such, Lonsec considers the process to be less sensitive to valuation than peers.

“Lonsec believes the Fund offers investors a good opportunity to achieve returns consistent with the Fund’s objective and to outperform peers and G-REIT benchmarks.”

Chris Bedingfield from Quay said, “the ratings upgrade is a testament to the fund’s investment process, which is not benchmark driven but rather is based on identifying the best rent-based investment opportunities backed by long term secular themes and trends.

“The fund offers access to a wide variety of attractive real estate opportunities across multiple geographies, many of which are not available in Australian real estate.”

Quay was launched in May 2015 as a partnership with principals Justin Blaess and Chris Bedingfield and Bennelong Funds Management. Prior to this, the business operated as Quay Real Estate Advisors, which was founded by Justin and Chris in 2013.

The Lonsec rating upgrade follows the “Superior’ rating awarded by SQM in January 2017.

[1] The Quay Global Real Estate Fund was launched 31/1/2016. Performance information before this date relates to the strategy which was launched by the team 30/7/2014.

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