MLC Wholesale Property Securities (MLC0263AU) Report & Performance

What is the MLC Wholesale Property Securities fund?

MLC Wholesale Property Securities is designed to be a complete portfolio for the Australian property securities asset class, and aims to deliver growth by using investment managers that invest and diversify across many listed Real Estate Investment Trusts and companies within that asset class. The fund invests primarily in Australian property securities, including listed Real Estate Investment Trusts and companies across most major listed property sectors. It doesn’t normally invest in direct property, but may have some exposure to property securities listed outside of Australia from time to time.

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For MLC Wholesale Property Securities

MLC Wholesale Property Securities Fund Commentary September 30, 2023

The fund delivered a negative return of -0.9% for the quarter and 2.0% in the year to 30 September 2023 (before fees and tax). The fund outperformed the benchmark return by 0.3% for the quarter and 0.9% over the past year.

Global government bond yields have risen sharply in the past three months in response to inflation concerns. Bond investors appear to have become more cautious given rising oil prices and guidance from various central banks that they were prepared to further raise interest rates and hold them there. This view of “higher for longer” interest rates has also impacted global share markets. By contrast, corporate bonds have been more resilient. The current levels of corporate yields have proven more appealing to investors.

During the September quarter we made some changes to our fixed income strategy, impacting the building blocks used for securitised debt and Australian short duration credit strategies. We believe the changes will provide better risk-adjusted return outcomes and will generate better and more consistent returns for our diversified fund investors in an environment of higher, more normalised, bond yields.

READ HISTORICAL PERFORMANCE COMMENTARIES

Product Snapshot

  • Product Overview
  • Performance Review
  • Peer Comparison
  • Product Details

Product Overview

Fund Name APIR Code
? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.
Structure
?
Asset Class
? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.
Asset Category
? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.
Peer Benchmark Name
? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.
Broad Market Index
? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.
FUM
? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.
Management Fee
? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.
Performance Fee
? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.
Spread
? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
MLC Wholesale Property SecuritiesMLC0263AUManaged FundsProperty and InfrastructureAustralian Listed PropertyProperty - Australian Listed Property IndexASX Index 200 A-REIT Index75.78 M0.73%0.00%0.49%

Performance Review

Fund Name Last Month
? Returns after fees in the most recent (last) month).
3 Months Return
? Returns after fees in the most recent 3 months.
1 Year Return
? Trailing 12 month returns.
3 Years Average Return
? Average Annual returns from the last 3 years.
Since Inc. Average Return
? Average (annualised) returns since inception
1 Year Std. Dev. (Annual)
? The standard deviation (or annual volatility) of the last 12 months.
3 Years Std. Dev. (Annual)
? The average standard deviation (or annual volatility) from the last 3 years.
Since Inc. Std. Dev. (Annual)
? The average standard deviation (or annual volatility) since the fund inception.
1 Year Max Drawdown
? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
3 Year Max Drawdown
? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Since Inc. Max Drawdown
? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
MLC Wholesale Property Securities10.53%15.65%15.55%6.02%7.44%20.32%20.96%16.65%-12.72%-27.98%-65.67%

Peer Comparison

Fund Name Peer Index Name
? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.
12 Months Excess Return
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
Excess Return Annualised Since Inception
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
12 Months Alpha
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
Alpha Annualised Since Inception
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
12 Months Beta
? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
Beta Annualised Since Inception
? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
12 Months Tracking Error
? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
Tracking Error Since Inception
? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
12 Months Correlation
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Correlation Since Inception
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
MLC Wholesale Property SecuritiesProperty - Australian Listed Property Index-0.17%-0.17%0.03%0%0%0.961.2%2.13%10.99

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
MLC Wholesale Property SecuritiesYes-https://www.mlc.com.au/-

Product Due Diligence

What is MLC Wholesale Property Securities

MLC Wholesale Property Securities is an Managed Funds investment product that is benchmarked against ASX Index 200 A-REIT Index and sits inside the Property - Australian Listed Property Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The MLC Wholesale Property Securities has Assets Under Management of 75.78 M with a management fee of 0.73%, a performance fee of 0.00% and a buy/sell spread fee of 0.49%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the MLC Wholesale Property Securities has returned 10.53% in the last month. The previous three years have returned 6.02% annualised and 16.65% each year since inception, which is when the MLC Wholesale Property Securities first started.

How is risk measured in this investment product?

There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since MLC Wholesale Property Securities first started, the Sharpe ratio is 0.31 with an annualised volatility of 16.65%. The maximum drawdown of the investment product in the last 12 months is -12.72% and -65.67% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.

What is the relative performance of the investment product?

Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The MLC Wholesale Property Securities has a 12-month excess return when compared to the Property - Australian Listed Property Index of -0.17% and -0.17% since inception.

Does the investment product produce Alpha over its Peers?

Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. MLC Wholesale Property Securities has produced Alpha over the Property - Australian Listed Property Index of 0.03% in the last 12 months and 0% since inception.

What are similar investment products?

For a full list of investment products in the Property - Australian Listed Property Index category, you can click here for the Peer Investment Report.

What level of diversification will MLC Wholesale Property Securities provide?

MLC Wholesale Property Securities has a correlation coefficient of 0.99 and a beta of 0.96 when compared to the Property - Australian Listed Property Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.

How do I compare the investment product with its peers?

For a full quantitative report on MLC Wholesale Property Securities and its peer investments, you can click here for the Peer Investment Report.

How do I compare the MLC Wholesale Property Securities with the ASX Index 200 A-REIT Index?

For a full quantitative report on MLC Wholesale Property Securities compared to the ASX Index 200 A-REIT Index, you can click here.

Can I sort and compare the MLC Wholesale Property Securities to do my own analysis?

To sort and compare the MLC Wholesale Property Securities financial metrics, please refer to the table above.

Has the MLC Wholesale Property Securities been independently verified by SMSF Mate?

This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.

How can I invest in MLC Wholesale Property Securities?

If you or your self managed super fund would like to invest in the MLC Wholesale Property Securities please contact via phone or via email .

How do I get in contact with the MLC Wholesale Property Securities?

If you would like to get in contact with the MLC Wholesale Property Securities manager, please call .

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the MLC Wholesale Property Securities. All data and commentary for this fund is provided free of charge for our readers general information.

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Historical Performance Commentary

Performance Commentary - June 30, 2023

The fund delivered a negative return of -1.1% for the quarter and 0.7% in the year to 30 June 2023 (before fees and tax). The fund outperformed the benchmark return by 0.5% for the quarter and 0.6% over the past year.

Global government bond yields have risen in the past three months. Better global economic activity and tough talk from central banks on the need to reduce inflation have driven higher bond yields. Investors also preferred global shares over bonds given the mania for ‘Artificial Intelligence’ (AI) technology stocks and a stabilisation in the US banking system after March’s ‘Silicon Valley’ crisis.

Corporate bonds have also benefitted from improving risk appetite with narrower credit spreads. Investors are finding the current corporate yields as now providing attractive income potential compared to recent years.

During the June quarter MLC appointed new managers to the fixed income’s extended credit strategy. We believe the addition of Bentham Asset Management and Stone Harbor Investment Partners will provide better risk-adjusted return outcomes for the fund’s extended credit strategy. These new investment manager strategies have diversity of investment approach, insight, and demonstrated ability at outperforming their market benchmarks.

Performance Commentary - March 31, 2023

Performance drivers and positioning of the fund for the recent calendar quarter are explained below. Our investment experts also provide regular investment updates at mlcam.com.au/insights

The fund returned 3.3% for the quarter and -2.8% in the year to 31 March 2023 (before fees and tax). The fund underperformed the benchmark return by 0.2% for the quarter and by 0.3% over the past year.

Global government bond yields fell sharply in the first quarter of this year. Encouraging signs that global inflation pressures have peaked with lower commodity prices and improved supply conditions was the initial driver of lower bond yields. Global banking stresses in March with the failure of three US regional banks and Credit Suisse’s woes then accelerated the fall in government bond yields.

Corporate bonds proved resilient to this global banking stress. There has been some modest increase in credit spreads in March, but investors are finding the current corporate yields as now providing attractive income potential compared to recent years..

Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.

Performance Commentary - March 31, 2023

The fund returned 3.3% for the quarter and -2.8% in the year to 31 March 2023 (before fees and tax). The fund underperformed the benchmark return by 0.2% for the quarter and by 0.3% over the past year.

Global government bond yields fell sharply in the first quarter of this year. Encouraging signs that global inflation pressures have peaked with lower commodity prices and improved supply conditions was the initial driver of lower bond yields. Global banking stresses in March with the failure of three US regional banks and Credit Suisse’s woes then accelerated the fall in government bond yields.

Corporate bonds proved resilient to this global banking stress. There has been some modest increase in credit spreads in March, but investors are finding the current corporate yields as now providing attractive income potential compared to recent years..

Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.

Performance Commentary - December 31, 2022

The S&P/ASX300 Property Total Return Index (‘market benchmark’) returned 11.6% in the quarter to 31 December 2022. The fund returned 12.1% (before fees and tax) in the quarter, which was 0.5% above the return of the market benchmark.

A-REITs outperformed Australian equities (ASX300) in the December quarter. But after outperforming the broader equity market in 2021, higher bond yields and debt costs led A-REITs to produce a disappointing total return of -20.06% in 2022. Consequently, A-REITs significantly underperformed relative to the ASX300 which returned -1.8%. Interestingly 2022 was the largest relative underperformance of the sector since 2009.

Over the December quarter, within A-REITs retail, residential developers, industrial and childcare sectors outperformed, whilst office, self-storage and property fund managers underperformed. Operationally, A-REITs generally continue to report no deterioration in tenant demand nor tenant health, with office being somewhat of an exception. A-REIT leverage remains moderate and most companies remain reasonably placed in the face of a likely economic slowdown in 2023.

In terms of retail, malls remain stable, and metrics were encouraging. High occupancy (98.5%+) reflects retailers recognising the importance of bricks and mortar stores. As a result, retailers are investing in their physical locations as part of their omni-channel sales strategies. As a read-through from offshore markets, U.S. retailer Target (no relation to Target Australia) intends to lease larger stores to support digital/online sales fulfilment.

Office conditions remain challenging and workers returning to the office has been slow. For office REITs leased occupancy is typically in the range of 90-95% which is above elevated office market vacancy rates of ~13-15% in Sydney and Melbourne. Likely higher unemployment in 2023 will weigh and there are early signs of job losses in the technology sector. Incentives of 30-40% of rent offered to tenants by landlords highlights the lack of pricing power. Despite the elevated vacancy rates, several A-REITs intend to develop more office space in order to take market share as office employers seek newer buildings with superior amenity in order to attract and retain office workers.

Residential land and apartment sales have fallen dramatically as higher interest rates constrict home buyer borrowing capacity and dampen sentiment. CoreLogic data indicates national house prices have declined 8% since the peak in May 2022, reflecting the fastest fall on record. Notably, house prices remain above pre-pandemic levels. Buyer enquiry has moderated to pre-pandemic levels and defaults remain low, though Stockland for example is expecting defaults to rise by Jun-23.

The fund returned -18.9% (before fees and tax) in the year to 31 December 2022. This was 1.1% above the market benchmark, with Resolution Capital providing the majority of the funds outperformance.

Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.

Performance Commentary - September 30, 2022

The S&P/ASX300 Property Total Return Index (‘market benchmark’) returned -6.9% in the quarter to 30 September 2022.

The fund returned -6.2% (before fees and tax) in the quarter, which was 0.7% above the return of the market benchmark.

Against a tough macroeconomic backdrop, Australian Real Estate Investment Trusts (A-REITs) underperformed Australian shares for the September quarter. Within A-REITs, retail, diversified and self-storage outperformed whilst industrial, office and childcare underperformed.

In terms of retail, malls positively surprised with improved operating metrics as footfall recover, however leasing spreads remain negative, which means that the rents on new leases remain below previous passing rents at lease expiry. We also note that grocery anchored shopping centres remain resilient and continue to benefit from the ‘shopping local’ trend.

Fundamentals remain challenged in office markets. Market vacancies remain elevated at ~14-15% in Sydney and Melbourne, though A-REITs on average reported a slight improvement in occupancy to ~94% as leasing activity picked up.

A-REITs continue to message a “flight to quality” theme with tenants preferring new, modern buildings with excellent amenity to attract and retain staff. Therefore, operating conditions remain stronger for premium and A-grade assets whilst obsolescence risk is rising for lower quality buildings,

In the industrial subsector fundamentals remain strong. Low market vacancy of <1% combined with robust tenant demand is resulting in accelerating double digit market rent growth. the fund returned -19.9% (before fees and tax) year to 30 september 2022. this was 1.2% above benchmark’s -21.1% return, resolution capital providing majority of fund’s outperformance.

Performance Commentary - June 30, 2022

The S&P/ASX300 Property Total Return Index (‘market benchmark’) returned -17.5% in the quarter to 30 June 2022. The fund returned -17.1% (before fees and tax) in the quarter, which was 0.4% above the return of the market benchmark.

Australian Real Estate Investment Trusts (A-REITs) underperformed broader shares during the June quarter as A-REITs typically have more debt in their capital structures than broader shares, which increase earnings sensitivity to rising debt costs. Similar to last quarter, the A-REIT sectors which outperformed this quarter included retail, office and childcare.

Underperforming sectors included self-storage, the higher growth-oriented property fund managers and industrial landlords, and interest rate sensitive residential companies. Retail outperformed the benchmark this quarter. The sector includes landlords which own defensive, non-discretionary retail assets including grocery-anchored shopping centres, bunnings warehouses and service stations. The office sector only marginally outperformed with primary constituent Dexus (DXS) announcing a significant transaction to acquire Collimate Capital’s (formerly AMP Capital) $28bn domestic real estate and infrastructure funds management platform.

Real estate leased to the childcare industry remains a favoured sector of one of our property managers. They are positive given the strong inflation protection afforded by long dated leases which escalate annually by the greater of 2.5% or inflation, disciplined management teams and lowly levered balance sheets. The sector stands to benefit from additional funding from the new federal government for its tenants.

Industrial A-REITs underperformed this quarter, including heavyweight developer and fund manager Goodman Group (GMG). GMG upgraded 2022 financial year (FY2022) earnings growth guidance to 23% from 20% and highlighted strong operating fundamentals and continued growth in its high margin development pipeline. However, its performance was likely dragged by the same macroeconomic sentiment weighing on global industrial REIT’s due in part to e-commerce giant Amazon, and GMG’s largest tenant (11% of rent), flagging its intention to sublet excess US warehouse expansion space, after having doubled its footprint in recent years.

The outlook for the residential development sector remains challenging, after several years of buoyant conditions aided by government stimulus and low interest rates. Diversified REITs Stockland (SGP) and Mirvac (MGR) issued quarterly updates in which they reaffirmed FY2022 guidance for ~7% earnings growth.

The fund returned -10.3% (before fees and tax) in the year to 30 June 2022. This was 0.9% above the market benchmark’s -11.2%% return, with Resolution Capital providing the majority of the funds outperformance.

Performance Commentary - March 31, 2021

The S&P/ASX300 Property Total Return Index (‘market benchmark’) returned -0.6% in the quarter to 31 March 2021.The fund returned -0.4% (before fees and tax) in the quarter to 31 March 2021, which was 0.2% above the return of the market benchmark.

After recording a very strong 13.2% return in the December quarter following news in November of three vaccines with high efficacy against COVID-19, the sector effectively marked time this quarter. The significant increase in local and offshore bond yields was one reason why the sector underperformed the broader share market, even though the financial results reporting period indicated improved circumstances for many Australian real estate investment trusts (A-REITs).

As the economy has recovered and COVID-19 disruption has eased, rent collections have improved dramatically, enabling many A-REITs (especially retail property landlords) to partly reverse prior conservative provisioning. In addition, more A-REITs felt able to provide earnings or distribution guidance for the year ahead. As for occupancy conditions, overall retail occupancy for the A-REIT sector has remained surprisingly strong, declining overall by only 0.10% over the last six months to 98.2%. However, the economic impacts associated with COVID-19 has dampened demand for office space. Vacancy rates are increasing due to tenants reducing their space requirements or subleasing space. Whilst rents are broadly holding firm, tenant lease incentives are increasing to varying degrees. Despite softening net effective rents, investor demand for office properties remains strong and capital values are holding firm.

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