Invista to open global shares fund to public
LONDON (Reuters) - Invista Real Estate, Britain's biggest quoted property fund manager, plans to open its fledgling global stocks fund for public investment in early 2010 after trumping benchmarks in its inaugural year.
Director Robert Promisel said the Invista Global Real Estate Securities fund is now fully invested, after extraordinary stock market turbulence sparked by the Lehman Brothers collapse forced a five-month moratorium on investment in property shares.
"We've been live since September 12 (2008), the Friday before Lehman. We put 7 percent to work on that Friday and invested in drips and drabs over the next two weeks until we realised an unprecedented correction was unfolding," he told Reuters.
"So we stopped and cycled into bonds and between October and February, we didn't put a single new pound into equities. By early March, about a third of our portfolio was in bonds. Now we have less than 4 percent in fixed income," he said.
The decision to move into the bargain-filled market for unsecured company bonds offset the volatility of property stock prices and helped the fund avoid potential dilution of its equity ahead of a wave of emergency share offerings.
This rationale helped the team to establish a track record most veterans would be proud of, Promisel said, adding that discounted bonds offered equity-like returns with robust income.
Since inception, the sterling-denominated fund, seeded with 10 million pounds of Invista's balance sheet capital, is up 14.7 percent, versus a 15.1 percent fall in its benchmark EPRA/NAREIT Global Real Estate index.
It has delivered an unaudited, net 22.1 percent return in the January to end-August period, against a 10.6 percent rise in the index over the same period.
DIVERSIFICATION
The fund holds 40 to 60 positions at any one time, with a maximum of 10 percent in any one investment. It echoes the index in terms of geographical spread, with 45 percent in Asia, 37 percent in N. America and 18 percent in Europe.
At June 30, its biggest three investments were Hong Kong's Sun Hung Kai Properties (0016.HK), Japan's Mitsubishi Estate (8802.T) and U.S. mall owner Simon Property Group (SPG.N).
These represent three of the five biggest index constituents but Promisel denied the fund was a "benchmark hugger".
"Of the 20 largest constituents in the index, we have no exposure to 10 of them. We're benchmark aware but just because a firm is in the index, it doesn't mean it is a sound investment".
Supporting this, Promisel said Britain was one country the fund was overweight in relative to the benchmark. The fund's UK holdings include Hammerson (HMSO.L), Segro (SGRO.L), Big Yellow (BYG.L), Shaftesbury (SHB.L) and Derwent London (DLN.L).
The fund is biased towards retail property companies because office company cash flows, a key selection criterion, would remain depressed for longer, Promisel said. Continued...
