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The Sanlam Global Property Fund gives clients exposure to the global listed real estate market.
This is a differentiated exposure to international investment markets with an investment that is historically not as risky as equities, but offers more long-term return than bonds, says Richard Bray, head of strategy & client solutions at Sanlam Investments Retail Business.
The fund should be considered by investors with a long-term time horizon who are willing to invest offshore, in international markets, and who are aware of the market and currency risks of such an investment.
South African-domiciled investors will need to use their foreign allowance to invest in the fund because it is listed offshore, in Ireland.
Bray says a long-term investment horizon allows fundamentals to be rewarded. “Our belief is that capital markets are inefficient in the short to medium term.
“And because most inefficiencies occur in the short term, we believe an active investment management strategy can be employed to exploit these inefficiencies over the long term.”
According to him, global property is historically more interest-rate sensitive than vanilla global equities, but not as interest-rate sensitive as global bonds. Additionally, global property investments’ returns are driven by a combination of capital growth and income.
The opportunity for capital growth in 2018 remains, but is fairly limited, says Bray, and income levels should be fairly stable.
“As a result, a mid-single-digit return is entirely possibly for 2018, driven mainly by the income levels.
“More broadly, global property investments are likely to deliver a return somewhere between global equities and global bonds in 2018, but probably more like global bonds, as they did in 2017, given where we are in global market cycles.”
He adds that the global listed property market, like equity markets more broadly, is dominated by the US.
Hence the largest number of investment opportunities is US-domiciled, although many US-listed securities have much more underlying global exposure than it first seems, says Bray. The fund’s exposure to North America is 58%.
“We believe in a fundamental, research-driven, team approach, which means we are valuation aware. The team approach helps us all, individually, to manage our behavioural biases. Finally, we believe that investment discipline is crucial,” says Bray.
Why finweek would consider adding it:
The Sanlam Global Property Fund won the award for being the top performer in its fund category at the recent Raging Bull Awards ceremony.
The Raging Bull Awards recognise the top managers in the South African unit trust industry, measured on their long-term performance.
Awards for asset-specific categories of funds are based mainly on straight performance, calculated by Profile Data for the three-year period to end 2017. The fund has outperformed its benchmark since inception in 2012.
This article originally appeared in the 1 March edition of finweek. Buy and download the magazine here.
