Listed Property Fund

(Formerly Forsyth Barr Listed Property Fund)

Overview

The fund aims to achieve positive long-term returns by investing in selected listed property vehicles which will typically have high levels of movement up and down in value.

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Unit Price

Month End Unit Price

As at 30 Apr 2022

2.5787 NZD

The unit prices shown do not take into account any adjustment for any accrued PIE tax that individual investors may need to pay on withdrawal. Buy/sell spreads may apply when transacting - there are currently none.

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Manager's Comment

Market Commentary

April saw a continuation of themes from the March quarter. Inflation repeatedly surprised to the upside and saw central banks rapidly move towards raising short term interest rates. The Ukrainian crisis has yet to be resolved, creating further risks to economic growth and supply chains globally. Whilst many markets began removing restrictions related to the Covid-19 pandemic, China has begun to impose tighter restrictions as Omicron takes hold there, creating further disruption. These continued headwinds to economic growth saw investment markets generally deliver negative returns over April.

In April the Reserve Bank of New Zealand (RBNZ) raised rates 50 basis…

Market Commentary

April saw a continuation of themes from the March quarter. Inflation repeatedly surprised to the upside and saw central banks rapidly move towards raising short term interest rates. The Ukrainian crisis has yet to be resolved, creating further risks to economic growth and supply chains globally. Whilst many markets began removing restrictions related to the Covid-19 pandemic, China has begun to impose tighter restrictions as Omicron takes hold there, creating further disruption. These continued headwinds to economic growth saw investment markets generally deliver negative returns over April.

In April the Reserve Bank of New Zealand (RBNZ) raised rates 50 basis points to 1.5%. The Monetary Policy Committee argued that a 50bp hike was consistent with its ‘least regrets’ approach to setting policy. The Committee is clearly worried about inflation expectations becoming unanchored and argued that faster tightening now is to reduce that risk. This hawkish commentary saw bond yields move sharply higher, negatively impacting interest rate stocks (including property) that are perceived as less attractive.

Portfolio Performance

The Listed Property Fund delivered a gross return of -2.62% for the month of April, outperforming the fund’s market index return of -3.50% by +0.88%.

For the 12 months to the end of April the Listed Property Fund delivered a gross return of -0.51%, outperforming the fund’s market index return of -3.38% by +2.88%.

Key contributors to outperformance over the month were overweight positions in Australian names Lendlease Group, Centuria Industrial REIT, Charter Hall Long WALE REIT, plus our long suffering overweight position in Asset Plus after the latter re-rated on news of the sale of one of its key Auckland properties. The only material detractor from performance was not owning Winton Land Limited as that company’s share price outperformed the index.

Outlook

As the Ukrainian crisis has persisted, we are tempering our generally positive view of the global economy, and therefore the outlook for company profits. It appears likely that this new disruption to commodity supply – particularly energy and wheat - along with further pandemic related lockdowns in China, will cause inflation to stay higher for longer than we previously expected.

April again saw markets move interest rates higher. Around nine months ago we felt most central banks and the markets themselves had underestimated the impact inflation would have on interest rates, fixed interest market returns, and yield sensitive names. Now we think a much more realistic view of the future outlook has been priced into fixed interest markets and their valuations are more attractive. Equity markets have fallen in tandem with higher interest rates, however (strangely) the New Zealand property index has not materially underperformed the broader market returns.

In recent years we have maintained a material portion of this funds’ investments in Australia with the sector by and large screening cheaper and facing a likely slower interest rate trajectory than in New Zealand. This thesis has added material outperformance but is now looking less compelling and we are beginning to move some of our Australian exposure to New Zealand. 

Locally we continue to favour New Zealand Rural Landco and continue to close our underweight in Vital Healthcare Property Trust with both well positioned to the see the benefit of the of their CPI-linked leases.

We actively manage the fund’s foreign currency exposures. As at 30 April 2022, these exposures represented 12.04% of the value of the fund. After allowing for foreign currency hedges in place, 7.93% of the value of the fund was unhedged and exposed to foreign currency risk.

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Major Investments

As at 30 Apr 2022
Company name % of fund
Goodman Property Trust 14.97%
Kiwi Property Group Limited 13.43%
Vital Healthcare Property Trust 11.62%
Precinct Properties New Zealand Limited 10.89%
Stride Property Group 8.57%
Property For Industry Limited 7.70%
Argosy Property Limited 7.59%
Investore Property Limited 3.99%
New Zealand Rural Land Company 2.65%
Asset Plus Limited 1.74%
Major holdings as % of total portfolio 83.16%
Total portfolio holdings 34

Performance over time

Return Comparison

As at 30 Apr 2022
1 Month 3 Months 1 Year *3 Years *Since commenced operation
Net Fund Return 1 Month -2.70% 3 Months -3.25% 1 Year -2.02% *3 Years 6.04% *Since commenced operation 7.41%
Gross Fund Return 1 Month -2.62% 3 Months -2.93% 1 Year -0.51% *3 Years 7.78% *Since commenced operation 9.09%
S&P/NZX All Real Estate Gross Index 1 Month -3.50% 3 Months -4.96% 1 Year -3.38% *3 Years 5.62% *Since commenced operation 9.48%

*Annualised
Net Fund Returns are calculated after deduction of fund charges, trading expenses and accrued tax for a New Zealand resident paying individual tax at the highest Prescribed Investor Rate (28%). Gross Fund Returns are calculated before deduction of taxes and fund charges but after deduction of trading expenses and including imputation credits where applicable. Market index returns do not have any deductions for fund charges, trading expenses or tax.

The S&P/NZX All Real Estate Gross Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Forsyth Barr Limited. Copyright © 2015 S&P Dow Jones Indices LLC, a subsidiary of McGraw Hill Financial Inc., and/or its affiliates. All rights reserved. Redistribution, reproduction and/or photocopying in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.

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Morningstar Performance

Morningstar is a leading global provider of independent investment research that ranks and reports on Funds within New Zealand and Australia. View the latest Fund Report for the Listed Property Fund.

Fund update

As at 31 March 2022

This document tells you how the Listed Property Fund has performed and what fees were charged. The document will help you to compare the fund with other funds. (Please note that this fund was previously known as the Forsyth Barr Listed Property Fund, and that Fund Updates may refer to the fund by that name.)
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General Fund Information

Risk indicator

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The risk indicator is rated from 1 (low) to 7 (high). The rating reflects how much the value of the relevant fund’s assets goes up and down (volatility). A higher risk generally means higher potential returns over time, but more ups and downs along the way. The risk indicator is based on the returns data for the five years to 31 March 2022. See more information about the risks of investing in the Product Disclosure Statement.

Target investment mix

Cash and cash equivalents 5%
New Zealand fixed interest 0%
International fixed interest 0%
Australasian equities 20%
International equities 5%
Listed property 70%

Things to note

  • Manager: Forsyth Barr Investment Management Limited
  • Investment manager: Octagon Asset Management Limited
  • Date the fund started: 26 June 2008
  • Tax status: Portfolio Investment Fund (PIE)
  • Minimum suggested investment time frame: At least five years
  • Benchmark: None
  • Currency: New Zealand dollars

View the Product Disclosure Statement for detailed information about this Fund and Octagon Investment Funds Scheme.

Fees

  • Annual fund charges are currently 1.15% p.a. of the value of your investment. We pay management and administration charges along with the Supervisor fee out of this. All fees and charges are quoted exclusive of GST.
Forsyth Barr Investment Management Limited is the issuer and Octagon Asset Management Limited the investment manager of the Octagon Investment Funds. The comments on this webpage do not take your personal circumstances into account. Before acting on any information on this webpage, we recommend you seek financial advice. Forsyth Barr Investment Management Limited, Octagon Asset Management Limited and their affiliates do not make any representation or warranty (express or implied) that this webpage is accurate, complete, or current and to the maximum extent permitted by law disclaim any liability for loss which may be incurred by any person relying on this webpage. This webpage is not intended to be distributed or made available to any person in any jurisdiction where doing so would constitute a breach of any applicable laws or regulations.
 
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