EUROPE - Henderson Global Investors has launched a property equities fund with the capability to take long and short positions on real estate listed stocks.
The Henderson Horizon pan-European property equities alpha plus fund, managed by Patrick Sumner, is expected to ‘short' stocks predominately in a bid to add alpha.
A test portfolio run on the same principles shorted both the UK
property sector in recent weeks and Belgian company Cofinimmo between June and September this year, and is said to have delivered returns of 12.4% and 10.4%, respectively.
Short positions are likely to be taken on the Asian market, as Henderson believes the property sector and stock market in China is "overheated" and is likely to experience marked volatility in the future.
The fund is described as a concentrated "best ideas" portfolio focusing on around 20-30 stocks with the best growth prospects to meet a tracking error of 5-15%.
Sumner said the firm may invest in smaller companies, as well as emerging markets in Eastern and Central Europe as well as placing up to one-third of assets in non-European opportunities where the potential for exceptional returns is identified.
"The European property share market is dominated by a few large property companies," he said. "The top 20 stocks account for 64% of the market cap of the benchmark.
Launch of a new property fund at a time of widespread uncertainty and pessimism may come as a surprise in some respects, however, Henderson's offering comes just days after the launch of a similar European property hedge fund by Thames River Capital.
Sumner says in the long-term it does not make sense to try to time the market, but the current situation in the markets offers opportunities for investors. "Not all markets are like the UK," he says.
"Property stocks are currently out of favour and, in our view, reflect an excessively pessimistic view of the sector's prospects. Such general gloom always presents opportunities to find growth stocks at attractive prices."
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