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Last NAV 136.7600 EUR as of 26/02/20
Synthetic Risk & Reward Information scale
Fund manager comment : 31/01/20
Over the month, the FTSE EPRA NAREIT Developed Total Return Net index returned +0.84% and +2.14% in USD and EUR terms, respectively. Most major listed real estate indices ended the month up with only two exceptions: Japan (+4.22%), Singapore (+1.96%), Continental Europe (+1.67%), and the US (+1.15%) were up, while Hong Kong (-7.78%) and the UK (-2.78%) were down, in local currency terms. On the monetary front, the Federal Reserve unanimously kept interest rates on hold during their first meeting of the year at 1.5%-1.75%, while confirming a rate rise is not expected anytime soon. The ECB kept interest rates on hold and maintained its €20 billion monthly QE program during its first meeting of the year. It started its policy review, championed by President Christine Lagarde, which will look at modifying its inflation target (close to, but below, 2%) as well as taking climate change into account via its corporate bond holdings. Meanwhile, the Bank of Japan kept short-term interest rates on hold, while pledging to steer the 10-year JGB yield at around 0%. On a bright note, the BOJ revised its growth forecast for the fiscal year starting in April to 0.9% from 0.7%. On the economic front, in the fourth quarter of 2019, the US economy grew by 2.1% on an annualized basis, while economic growth clocked in at 2.3% for calendar year 2019. Germany’s economy grew at its slowest pace since 2013, clocking in at 0.6% in 2019. The Sino-American trade war, Brexit, as well as structural changes in the car industry were the main reasons for the slow growth rate. The Eurozone purchasing managers’ index increased to 50.9 in December from 50.6 in November. The domestically focused services sector provided a boost to the PMI despite a slumping manufacturing sector. The US and China signed the Phase I of the trade deal in Washington, which will take effect in mid-February. China agreed to purchase $200 billion worth of US goods/services, promised not to manipulate its currency, and most importantly implemented more stringent rules with regards to intellectual property in China. The US will maintain tariffs on $360 billion worth of Chinese goods but promised no further escalation so long as China maintains its commitments. Ahead of the signing of the Phase 1 trade deal, the US Treasury department removed China from being designated as a currency manipulator. During the second half of the month, investors were unnerved after a deadly virus killed over 100 people and infected thousands in China which spread to several other countries. Chinese authorities instituted travel restrictions on three cities that were heavily impacted. In addition, several global retails such as Starbucks, McDonalds, and H&M closed stores in China in response to the crisis Unsurprisingly, risk assets sold off, particularly Asian bourses. After a long and drawn out process, the UK officially left the European Union on 31 January. For the equity bucket, all three regions positively contributed for the month. In terms of countries, the US, Japan, and Belgium were the top contributors, while the UK and Hong Kong were the only detractors. Prologis completed its all cash $3.99 billion acquisition of Industrial Property Trust IPT operates 37.5 million square feet of space spanning 236 properties, helping Prologis grow its footprint in key locations in Southern California, the San Francisco Bay Area, Chicago, Atlanta, Dallas, Seattle, and New Jersey. In addition, the San Francisco based global logistics provider announced it that it signed a development agreement for a 100k square meter facility with Samada, which is the logistics arm for Monoprix, the French retail chain. The first phase (65k square meters) will be completed in August 2021 with the second phase being delivered in December 2021. Investors cheered the news with Prologis shares rallying nearly 5% for the week. On the fixed income side, as geopolitical tensions continued to ease, the year has started on a positive tone and investors started reinvesting. Given the market conditions and the spread levels, we made new investments both in the primary and secondary market. In January, the Euro real estate spreads tightened by -4 bps, while the US real estate credit spreads widened by +1 bps over government bonds. Due to the current low spreads level environment, we continued to reposition our portfolio by selling our lower relative value names in favor of stronger ones. In terms of sectors, we reduced our data center exposure to Digital Realty Trust and reallocated those funds to CyrusOne. From a geographical perspective, we increased our exposure to the Nordics with Sagax on the logistics side and with Fastighets AB Balder and Heimstaden Bostad AB on the residential side. CyrusOne is a 6.5bn$ data center REIT focused on the colocation solutions, with 94% of its revenues coming from the US and the rest from the UK, Germany and Singapore. The company has a sound level of debt with Net Debt/ETBIDA of 5.7x and Net Debt/Investment Properties of 46.4%. We participated to the new issue of CyrusOne in euros at MS+150bps in January.
The figures provided relate to previous months or years and past performance is not a reliable indicator as to future performance. The Fund may not have a reference index. In such case, the Fund’s performance indicator is given as a basis for comparison only.
SRRI stands for Synthetic Risk & Reward Information: From 1 lower risk to 7 higher risk. Lower risk has potentially lower reward and higher risk has potentially higher reward. The risk category is calculated using historical performance data and may not be a reliable indicator of the Sub-Fund's future risk profile. The risk category shown is not guaranteed and may shift over time. The lowest category does not mean risk free.
|Performance indicator||Start date||End date|
|Performance table||Net performance||Performance indicator||Start date||End date|
|Risk table||Fund volatility||Benchmark volatility||Tracking error||Information ratio||Sharpe ratio||Beta||Alpha|
|Asset class||FRAMLINGTON EQUITIES|
|Legal authority||Autorité des Marchés Financiers|
|Fund Manager||Frédéric TEMPEL|
|Investment team||MT Framlington Listed Real Estate|