Transcription of Finance News Network Interview with Antares Listed Property Fund Portfolio Manager, Brett McNeill
Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me from the Antares Listed Property Fund is Portfolio Manager, Brett McNeill. Brett welcome to FNN.
Brett McNeill: Thank you.
Lelde Smits: The Fund is an actively managed investor in Australian Listed Property Securities. What is your benchmark and your strategy?
Brett McNeill: The Fund’s strategy is to deliver investors a very good total return over the long term, which we deem to be about five years. And the Antares Listed Property Fund has a particular emphasis on delivering investors a solid income return, that will hopefully grow over time. So we aim to beat the benchmark that we use for the Fund, and that’s the S&P ASX 200 A-REIT Accumulation Index. That’s a fairly common and standard index that’s used by investors in the Australian Listed Property space. And we give investors full liquidity, that’s a big part of the strategy as well. We think that’s a very important feature for investors, to be able to redeem their investment quickly and get their money back if they need to.
Lelde Smits: How did the Fund perform over the September quarter and further back, and what factors influenced your result?
Brett McNeill: The Australian REIT sectors continued to deliver very good performance. It had a great start to the September quarter, but then with a fair bit of volatility in the world financial markets ended up giving a lot of that back, over the month of September. So for the quarter as a whole, the sector was up 1.1 per cent. Our Fund delivered a return of 1.5 per cent after fees, so slightly above the benchmark.
Over the longer term, the sector’s had a great run over the last three years, particularly coming out of the Global Financial Crisis. So the Fund itself has delivered a return of 18.3 per cent per annum, over the three years to September 2014. And then before that, the returns have also been attractive and the Fund’s been able to beat its benchmark over a seven and 10 year timeframe, both after fees.
Lelde Smits: What has been one of your best performing stocks over the September quarter, and why did you choose to enter that position?
Brett McNeill: Westfield Group (ASX:WDC) has been a really good performer for the Fund recently, and that’s after it’s lagged a little bit in the last couple of years. It’s been quite a long term position for this Fund; we’ve seen a lot of value in the Company and the portfolio. And we think the major restructure that they completed in the last few months, splitting the Group into Westfield Corporation Limited (ASX:WFD) and Scentre Group Limited (ASX:SCG), is a really positive thing for investors. Much cleaner set of two investments and we think we’ll be able to deliver better returns over time.
For Westfield Corporation, it gives us exposure to projects that we see a lot of inherent value particularly World Trade Centre, the retail shopping mall that they’re building in New York. The next development at Westfield London, Scentre City in Los Angeles and the new development in Milan Italy, so we think there’s a lot of value in those projects.
Lelde Smits: The Fund is now eligible within separately managed accounts. Could you outline how this process works, the structure and also the key benefits?
Brett McNeill: The SMA version of the Antares Listed Property Fund is exactly the same in an investment sense. We use the same investment strategy, the same benchmark for the performance, same stock selection process and all the research activities. The main difference is in the structure of the two vehicles. So the SMA version gives the end investor more control and more direct ownership of their investment, as opposed to investing in a unit trust that the Antares Listed Property Fund is. So an SMA version of the Fund might be appropriate for investors who are more concerned over their tax position. Also the transparency; being able to see the stock holdings on a regular basis. So it gives them I guess, more ownership of the underlying investments that the vehicle holds.
Lelde Smits: Finally Brett, Australia’s real estate sector continues to remain buoyant. Which sectors are looking appealing to you?
Brett McNeill: The Antares Listed Property Fund has good exposure across all the main sectors of the Australian real estate markets. So the retail sector, office, industrial, residential, as well as some alternative sectors. The highlight of the most recent profit reporting season was definitely the residential sector, in our view. All the main metrics were extremely positive. So if you look at one stock we own, which is Stockland Limited (ASX:SGP), the net deposits that they took for the June quarter, were up 29 per cent versus a year ago. And that was really driven by some strong performance from the New South Wales projects. And that has driven really good increases in the profit for the residential division and the business as a whole. So that’s been a highlight.
The other sector that we really like out of the main commercial sectors is the industrial sector. It’s just delivering good solid predictable growth of two to three per cent. So not huge growth, but on top of a starting yield of about eight per cent, that adds up to a really good total return for investors of 10 to 11 per cent. And when gearing levels are in check and vacancy levels are very high, that’s a really attractive proposition for investors.
Another sector that we like which fits into a bit more of the alternative space is data centres, and one investment we have which is in the Asia Pacific Data Centre Group (ASX:ADJ). They reported a portfolio valuation increase of 10 per cent, which was great to see and very pleasing for our investors.
Lelde Smits: Brett McNeill, thank you for the update from Antares Listed Property Fund.
