Market Outlook and Fund Positioning
–A substantial component of the Fund is invested within the Americas. US economic growth is proving relatively resilient, despite fiscal headwinds. The consensus forecast is for roughly 2% GDP growth for 2013 and closer to 2.5% for next year, as impacts from recent Federal tax increases and the sequester gradually dissipate.
–Within the US, we believe shorter-term, more economically sensitive sectors,such as hotel,apartment and industrial REITs,are likely to outperform more defensive, longer lease-term sectors such as health care and shopping centres in a rising interest rate but improving economic scenario.
–The outlook for Europe remains subdued. The Fund has slightly underweight positions for ContinentalEurope. An overweight exposure to Central London at the expense of the rest of the UK has been maintained. The Fund favours Northern Europe over Southern Europe in the face of ongoing macroeconomic and political uncertainty.
–Although May’spullback has eased some of the more stretched valuations, we continue to view the Japanese property sector with caution. The outlook for the office sector remains challenging, whilst the residential sector appears to be close to its peak. Macroeconomic events are likely to influence the direction of the market in the near future. We expect Singapore REITs to deliver stable earnings in 2013,albeit with minimal growth.
–Overweight exposure to Hong Kong is maintained. Hong Kong landlords enjoy healthy balance sheets,investment grade assets, defensive business models,attractive valuations and the prospect of solid earnings growth.Risk adjusted return expectations from Hong Kong developers are compelling at current prices, due to the recurrent income streams generated by their investment portfolios.
For further details (providing a more detailed review on the fund and the sector as a whole) please refer to the following PDF-document:
