Fund information

October 2013

Real estate stocks enjoyed a strong October with the (FTSE EPRA/NAREIT Developed Europe Capped Net Total Returnin GBP) rising +5.4% in the month. Once again performance was dominated by the UK (+6.6% in GBP) whilst the rest of Europe rose +3.4% (in EUR). On a global view, Europe was the strongest performing region with the US returning +4.5% (in USD). Concerns over the possibility of near term (earlier than Q2 2014) reduction in QE by the Fed have now diminished and 10 year US Treasury yields have moved back down towards 2.6% (from over 3%). The result has been a return of risk appetite for leveraged assets. The month also witnessed a renewed demand for European equities and the Euro (which gained 2% against GBP and USD intra month) particularly Southern Europe. IGD and Beni Stabili both returned more than 10% in the month and the fund sold stock into this buying interest. The only Greek stock in the index, Eurobank rose +21%. It is now up 84% YTD and that huge increase brings its 3 year performance just back into positive territory.

Our concern is that investors are getting ahead of themselves in believing that all parts of Europe can grow their way out of their deficits. The region is still suffering from a huge range of issues including rising unemployment (Spain and Italy) and falling house prices (where state intervention is on its way – the Netherlands). The weakening inflation numbers towards the end of the month (<1% pa) served as a strong reminder of the difficulties.

The Trust’s NAV rose 6.0% in the month, outperforming the benchmark by 60bps. Performance versus the benchmark was particularly driven by the long positions in the UK and our underweight in Switzerland. The Swiss companies(-0.9%) have continued to suffer as rental growth remains negative in the Zurich office markets and investors do not feel the need for the traditional safe haven of Swiss Franc backed assets. In the UK, stocks associated with the residential market (both directly and indirectly) did well. St Modwen (+15.9%) combines a residential land bank with a high yielding industrial portfolio whilst Safestore (+10.6%) is one of the two leading self storage operators and will benefit from rising turnover in the housing market. Grainger (+11.3%) is the only pure owner of standing residential stock.

In Scandinavia, the Swedish stocks collectively had a strong month rising +6.4% as investors priced in no move in the Riksbank base rate. It was the industrial players, Castellum (+8.5%), Wihlborgs (+8.5%) and Kungsladen (+11%) which performed the strongest. In Norway, we were once again disappointed by the management of NPRO and the stock slid -4.2% on numbers, bringing the YTD to -8%, the worst performer in the index year to date.


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Prices correct as of close 2018-02-20. Last Published NAV is as at the previous business day.
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