Performance as at 31 March 2020
Performance is after the annual fund charge, and before tax and membership fees (if applicable). For more information, see legal information and disclaimers.
What happened this quarter (3 months to 31 March 2020)
- The property sector had a tough first quarter, following global indices lower as the COVID-19 (coronavirus) outbreak weighed heavily on most sectors. While property tends to do well in a low-interest-rate environment, the sharp economic downturn has increased the probability of missed rent payments or renegotiations.
- Over the quarter, the New Zealand listed property sector fell 20.3%, with all 11 companies in the index finishing lower. Meanwhile, the Australian property sector underperformed most global counterparts, falling 34.4%.
- Despite broad weakness in the sector, the fund saw solid gains in its underweight position in Argosy Property, which fell 33.81% over the quarter on news the company’s retail asset divestment (Albany Lifestyle Centre) failed to settle. Furthermore, the company is one of the more highly geared in the sector, making it susceptible in market downturns.
- In addition, the fund’s underweight to Kiwi Property Group was another strong contributor, with shares in the company finishing the quarter down nearly 40%. The company’s portfolio is around 70% shopping centres and retail, which significantly underperformed as the coronavirus outbreak worsened.
- At the other end, the fund’s holding of Augusta Capital weighed on performance with shares in the company ending sharply lower over the quarter. The weakness came after ASX-listed Centuria Capital Group withdrew its $180 million takeover bid. The takeover price of $2 was announced on 29 January, but after Centuria Capital scrapped its bid, shares in the company fell below $1, eventually finishing the quarter down more than 40%.
- Another strong detractor was the fund’s underweight to Goodman Property Trust. The stock outperformed the benchmark, falling just 2.63% over the quarter.
- Despite weakness in the property sector, we believe investors will still find quality assets in good locations attractive investments.
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