UK - Schroders’ Global Property Securities Fund will be opened to investors on December 9. As its name suggests, it will be seeking to reward investors by investing in listed property companies and real estate investment trusts (REITs) in Asia, North America and Europe.
To manage the fund Schroders is partnering with European Investors Incorporated (EII), a niche real estate investment manager with offices in New York and Amsterdam. The fund’s performance will be measured against the FTSE EPRA/NAREIT global real estate index. It is expected to outperform the index on a rolling 3 – 5-year basis.
EII’s Jim Rehlaender said: “The long-term outlook for the property securities market is robust. The universe of companies is already substantial and is set to expand as more jurisdictions introduce REIT legislation. Schroders and EII are well placed to find the best new opportunities as they appear and capitalise on global property cycles and valuation anomalies.”
Mr Rehlaender said EII tended to focus on opportunity-rated sectors and geographies. He cited the example of Aeon Mall, a specialist Japanese shopping mall developer and manager which has strongly out-performed the EPRA Japan index for the last two years. He said that since he had been investing in the company its stock had risen from 1000 yen to 5,200 yen and its malls were recorded extremely low vacancy rates.
The Schroders fund will have a 35% exposure to Asia, but when it comes to China-based ventures Mr Rehlaender said he would only invest in Hong Kong and Singapore-based companies which could demonstrate relatively low gearing.
“Some domestic Chinese companies are engaged in huge projects with a ten-year development cycle, but a lot can go wrong over that period so we’re avoiding such exposures.”
Neil Turner, Schroders’ head of international property investment and research, said: “Our alliance with EII allows us to leverage its research capabilities as well as drawing upon its depth of experience of investing in the international property securities market. “We’re confident this fund will provide the means for investors to diversify their portfolio and gain exposure to the global property market.”
Mr Turner and Mr Rehlaender claimed the argument for holding global property securities was being enhanced by the increasing disparity in risk profile when compared to global equities. From an institutional point of view they believed this was helping to win the battle to have global property securities regarded as part of a real estate allocation rather than an equity holding.