November Performance Update

Posted by Grant Atchison on Nov 25, 2019 10:38:30 AM
Grant Atchison
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During the period, both the RBA and US Federal Reserve reduced official interest rates by -25bpts to 0.75% and 1.50% respectively, in attempts to stimulate economic activitiy despite already historically low interest rates.

 Key Figures

Investment Performance as at 31 October 2019  Month Quarter  1 Year 3 Year  5 Year 

Freehold Australian Property Fund

 1.3% 0.6%  13.6%  10.2%  11.7% 
Freehold A-REITs & Listed Infrastructure Fund*  0.9% (1.7%)  20.6%  11.1%  12.1% 

 A-REITs Index**

1.4% (0.1%) 23.8% 13.3% 13.2%

Listed Infrastructure Index**

2.8% 0.6% 32.0% 17.8% 16.9%

Unlisted Property Index***

0.4% 1.4% 6.4% 9.9% 10.6%

*Net of fees

*A-REITs Index is the S&P/ASX 300 AREIT Accumulation index; **Listed Infrastructure Index is a subset of S&P/ASX 200 Index infrastructure sub industries, as defined by the Global Industry Classification Standard (GICS) **Unlisted Property Index is the Mercer/IPD Australia Core Wholesale Property Fund Index

Key highlights:

  • Domestically, there are emerging signs that the residential market is recovering from its lows with CoreLogic dwelling prices increasing by 1.2% in October, following on from a 0.9% increase in September. These 'green shoots' underpinned solid share price gains in both Mirvac and Stockland given their exposure to the residential sector. Offsetting this strength, retail sales continue to underwhelm with August and September data coming in well below market expectations. This trend was clearly evident in a number of large retail landlords including Scentre Group, Vicinity and GPT Group, where sales growth in their quarterly updates was at the lower end of market expectations. 
  • Looking forward, we expect bond yields to remain low during a sustained period of subdued growth that will be supportive for defensive sectors such as A-REITs and listed infrastructure. Our focus remains on identifying quality companies with earnings stability, given our view that risk has not been priced correctly, and we remain confident that our patience will be rewarded in the future. 

What we're looking out for this month:

  • Is the current residential recovery for real, and how sustainable is it;
  • Can monetary policy effectively stimulate economic activity at these already historic lows, especially when many Australians are stashing cash and paying down debt; and
  • Will we start to see some outcomes from the increasingly positive rhetoric in the markets around the US / China trade talks.

Detailed fund updates:

If you have any questions, please don't hesitate to reach out on enquiries@freeholdim.com.au, or +61 2 9228 1400

 

Topics: reit, property