SG Hiscock Property aims to outperform the S&P/ASX 200 A-REIT Accumulation Index over rolling three to five year periods while providing a quarterly income stream. The Fund aims to build a diversified portfolio of listed property securities. SG Hiscock invests primarily in securities listed, or due to be listed on the Australian Securities Exchange (ASX), including real estate investment trusts (REITs), companies engaged in property investment, management, development or construction, and securities which invest in infrastructure assets and other similar assets. Tax-effective income refers to the amount of tax-deferred income the Fund has distributed over the last 10 years.
We continue to target Australian Real Estate Investment Trusts (AREITs) that provide solid fundamentals over the medium-to-long-term that are trading attractively relative to other AREITs. Overall we endeavour to invest in entities that offer a combination of:
• A Net Present Value (“NPV”) Discount;
• An Internal Rate of Return (“IRR”) Premium;
• Ideally a (Real, not manufactured) Free Cashflow Yield Premium; and
• A Lower Price to Net Asset Value (“NAV”).
• The S&P/ASX 200 AREIT Accumulation Index rose 2.3%. This was driven by Goodman Group and the potential opportunities and scale of developing data centres in its portfolio, as they theorise how best to take advantage of this long-dated opportunity. The industrial subsector was the outperformer both domestically and globally.
• The AREITs once more outperformed both the Global REITs (down 2.7%) and the general market (via the S&P/ASX 300 Accumulation Index) which was down 0.8%. Only the discretionary retail subsector outperformed AREITs. Utilities and staples were the laggards.
• Both the ten-year bond yield (4.03%) and ten-year real bond yields (1.54%) were little changed, but this was after the ten-year bond yield was north of 4.2% intra-month. It finished at its lows. This has resulted in the implied inflation expectations for the next 10-years remaining relatively stable at ~2.5% pa.
What is SG Hiscock Property SG Hiscock Property 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 SG Hiscock Property has Assets Under Management of 28.33 M with a management fee of 0.78%, a performance fee of 0 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 SG Hiscock Property has returned 10.81% in the last month. The previous three years have returned 6.66% annualised and 17.81% each year since inception, which is when the SG Hiscock Property 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 SG Hiscock Property first started, the Sharpe ratio is 0.25 with an annualised volatility of 17.81%. The maximum drawdown of the investment product in the last 12 months is -12.99% and -68.85% 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 SG Hiscock Property has a 12-month excess return when compared to the Property - Australian Listed Property Index of 1.04% and -0.94% 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. SG Hiscock Property has produced Alpha over the Property - Australian Listed Property Index of 0.07% in the last 12 months and -0.09% 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 SG Hiscock Property provide? SG Hiscock Property has a correlation coefficient of 0.98 and a beta of 1.02 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 SG Hiscock Property and its peer investments, you can click here for the Peer Investment Report.
How do I compare the SG Hiscock Property with the ASX Index 200 A-REIT Index? For a full quantitative report on SG Hiscock Property compared to the ASX Index 200 A-REIT Index, you can click here.
Can I sort and compare the SG Hiscock Property to do my own analysis? To sort and compare the SG Hiscock Property financial metrics, please refer to the table above.
Has the SG Hiscock Property 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.
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Comments from SMSF Mates SMSF Mate does not receive commissions or kickbacks from the SG Hiscock Property. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - July 31, 2023 We continue to target Australian Real Estate Investment Trusts (AREITs) that provide solid fundamentals over the medium-to-long-term that are trading attractively relative to other AREITs. Overall we endeavour to invest in entities that offer a combination of:
• A Net Present Value (“NPV”) Discount;
• An Internal Rate of Return (“IRR”) Premium;
• Ideally a (Real, not manufactured) Free Cashflow Yield Premium; and
• A Lower Price to Net Asset Value (“NAV”).
The S&P/ASX 200 AREIT Accumulation Index rose 4.18%, as the AREIT sector benefitted from increasing expectations that the interest rate rising cycle is coming close to the end. This was combined with the June quarter CPI coming in below expectations. The AREITs outperformed both the Global REITs (up 3.2%) and the general market (via the S&P/ASX 200 Accumulation Index) which was up 2.9%. The information technology sector continues to benefit from the AI thematic, only being surpassed by the energy and financial sectors in terms of performance, with the latter benefitting via its interest rate sensitivity.
Both the ten-year bond yield and ten-year real bond yields were relatively unchanged, north of 4% and 1.5% respectively. This has resulted in the implied inflation expectations for the next 10-years remaining relatively stable at ~2.5% pa. This figure is also in line with the RBA’s doctrine.
Performance Commentary - June 30, 2023 We continue to target Australian Real Estate Investment Trusts (AREITs) that provide solid fundamentals over the medium-to-longterm that are trading attractively relative to other AREITs. Overall we endeavour to invest in entities that offer a combination of:
• A Net Present Value (“NPV”) Discount;
• An Internal Rate of Return (“IRR”) Premium;
• Ideally a (Real, not manufactured) Free Cashflow Yield Premium; and
• A Lower Price to Net Asset Value (“NAV”).
The S&P/ASX 200 AREIT Accumulation Index was relatively flat, down.0.1%, with a predominant number of AREITs trading on an exdistribution basis in late-June.
The AREITs underperformed both the Global REITs (up 2.8%) and the general market (via the S&P/ASX 300 Accumulation Index) which was up 1.7%. The information technology sector continues to benefit from the AI thematic permeating the globe, whilst the materials sector was the best performing sector in the ASX in June.
Both the ten-year bond yield and ten-year real bond yields jumped ~40 bps, to 4.02% and 1.58% respectively. This has resulted in the implied inflation expectations for the next 10 years remaining relatively stable at ~2.4% pa, around where we forecast longer-term inflation to be. Thus, the inverse correlation between the AREIT sector’s performance and real bond yield movements was broken once more in June, as the market (overall) looks through the interest rate rises.
Performance Commentary - May 31, 2023 We continue to target Australian Real Estate Investment Trusts (AREITs) that provide solid fundamentals over the medium-to-longterm that are trading attractively relative to other AREITs. Overall we endeavour to invest in entities that offer a combination of: • A Net Present Value (“NPV”) Discount;
• An Internal Rate of Return (“IRR”) Premium;
• Ideally a (Real, not manufactured) Free Cashflow Yield Premium; and
• A Lower Price to Net Asset Value (“NAV”).
The S&P/ASX 200 AREIT Accumulation Index fell 1.8%, as the markets increasingly started to factor in further interest rate rises/higher for longer, given the ongoing, robust inflation data.
Consumer discretionary and staples were the worst performing sectors on the ASX in May, given a slowing in retail sales, tradingdown/value-conscious shopper coming to the fore. Retail AREITs, especially those exposed to discretionary retail fell in sympathy (unfairly in our view) given the fact that these sales figures have come-off relatively high levels and their rents are not determined upon a retailer’s sales turnover.
The AREITs (again) outperformed both the Global REITs (down 3.8%) and the general market (via the S&P/ASX 300 Accumulation Index) which was down 2.5%, driven by the underperformance in consumer sectors and financials. Information Technology delivered ~12%, benefitting from the AI thematic permeating the globe.
The ten-year bond yield rose 27 bps, to 3.61%. The ten-year real bond yields only rose 20 bps, to 1.17%. This has resulted in the implied inflation expectations for the next 10 years rising to 2.44%, edging closer to what we forecast longer-term inflation to be. The correlation between the AREIT sector’s performance and real bond yield movements was therefore reestablished, given the enhanced risk of further interest rate rises.
Performance Commentary - March 31, 2023 We continue to target Australian Real Estate Investment Trusts (AREITs) that provide solid fundamentals over the medium-to-longterm that are trading attractively relative to other AREITs. Overall we endeavour to invest in entities that offer a combination of:
• A Net Present Value (“NPV”) Discount;
• An Internal Rate of Return (“IRR”) Premium;
• Ideally a (Real, not manufactured) Free Cashflow Yield Premium; and
• A Lower Price to Net Asset Value (“NAV”).
The S&P/ASX 200 AREIT Accumulation Index dropped 6.8%, as markets sought liquidity, as fears of a global banking crisis swept through economies. The global banking sector’s appetite/ability to lend to commercial property (especially office) was doubted, given the loan books of the US regional banks being skewed towards commercial property.
Unsurprisingly, fund managers and office were the worst performers, as all sub-sectors finished in the red. We note that the residential-exposed names more generally delivered positive returns. The AREITs underperformed both the Global REITs (-3.9%) and the general market (via the S&P/ASX 300 Accumulation Index) which was relatively flat (-0.2%) driven by the materials, and communication services sectors.
The ten-year bond yield dropped 55 bps, to 3.3%, whilst the ten-year real bond yields fell by 45 bps, to 0.95%. This is in line with our assumed through-the-cycle real interest rate. This resulted in the implied inflation expectations falling from ~2.5% to 2.35%, which remains on the low-side to what we envisage inflation will be longer-term.
Performance Commentary - February 28, 2023 We continue to target Australian Real Estate Investment Trusts (AREITs) that provide solid fundamentals over the medium-to-longterm that are trading attractively relative to other AREITs. Overall we endeavour to invest in entities that offer a combination of:
• A Net Present Value (“NPV”) Discount;
• An Internal Rate of Return (“IRR”) Premium;
• Ideally a (Real, not manufactured) Free Cashflow Yield Premium; and
• A Lower Price to Net Asset Value (“NAV”).
The S&P/ASX 200 AREIT Accumulation Index marginally retreated (-0.3%) following January’s stellar start. The markets (domestically and globally) factored that interest rates rises have further to go and that reductions may be moderate. The stronger economic outlook allayed recessionary fears currently, as inflation, whilst most likely having peaked, looks set to remain persistent. The ten-year bond yield jumped 30 bps, to 3.85%, whilst the ten-year real bond yields leapt 35 bps, to 1.40%. The implied inflation expectations remain ~2.5%.
Fund managers were the worst performers, in another stark contrast to the prior month’s performance. Office was the best performing sector domestically, as the metrics reported during February’s results were not as bad as feared (to date). By contrast, office was the worst performer globally.
The AREITs outperformed both the Global REITs (-3.6%) and the general market (via the S&P/ASX 300 Accumulation Index) which was down 2.6%. This was driven by the miners, who were negatively affected by the broad-based jump in the US dollar (the Australian dollar fell three cents in February to US$0.67) which negatively impacted commodity pricing generally.
Performance Commentary - January 31, 2023 We continue to target Australian Real Estate Investment Trusts (AREITs) that provide solid fundamentals over the medium-to-longterm that are trading attractively relative to other AREITs. Overall we endeavour to invest in entities that offer a combination of:
• A Net Present Value (“NPV”) Discount;
• An Internal Rate of Return (“IRR”) Premium;
• Ideally a (Real, not manufactured) Free Cashflow Yield Premium; and
• A Lower Price to Net Asset Value (“NAV”). The S&P/ASX 200 AREIT Accumulation Index started 2023 in a complete contrast to 2022, up 8.1%, as the markets (both domestically and globally) broadly ran with the expectation that interest rate rises to not only cease in the near-term but reverse into cuts over the medium term, given the various economic data releases suggest a peak in inflation has been achieved.
Subsequently, this backdrop led to the fund managers being the best performers, a complete contrast to December 2022. Specifically, the ten-year bond yield declined 50 bps, to 3.55%. Ten-Year Real bond yields dropped by slightly more, down 54 bps, to 1.05%. The implied inflation expectations rose once more, but only 4 bps to 2.50%. This trend is consistent with our expectations about the longer-term inflation outlook. We note since the start of 2022, as the markets started to account for the increased likelihood of interest rate rises, the AREIT sector’s performance has become highly correlated with the movements in the ten-year real bond yield. As we come closer to the end of the interest rate rising cycle, we expect rates to stabilise at higher levels than has historically been the case than the years immediately prior and during the pandemic. We are comfortable with an investment environment predicated on positive real bond yields ~1%.
Global REITs benefitted from these same dynamics, performing in line with the AREITs, delivering 8.0%. The general market (via the S&P/ASX 300 Accumulation Index) was the laggard but still generated 6.3%. Utilities was the only sector to register a negative month, given recent government initiatives to cap power price rises.
Performance Commentary - December 31, 2022 We continue to target Australian Real Estate Investment Trusts (AREITs) that provide solid fundamentals over the medium-to-longterm that are trading attractively relative to other AREITs.
Overall we endeavour to invest in entities that offer a combination of:
• A Net Present Value (“NPV”) Discount;
• An Internal Rate of Return (“IRR”) Premium;
• Ideally a (Real, not manufactured) Free Cashflow Yield Premium; and
• A Lower Price to Net Asset Value (“NAV”). The S&P/ASX 200 AREIT Accumulation Index finished 2022 down 4.1%. This was reflective of the poor 2022 experienced by the AREIT sector, being down 20.1%. The rise in interest rates was a global phenomenon driving higher real bond yields. This was the key driver of this performance in both the month and year.
Consequently, the fund managers subsector, which traded on higher multiples was the worst hit. The culprit of the poor performance in December was the move by the BOJ to expand the range of the yield curve control targets, implying higher interest rates. This caught the markets unawares. In response, yields rose globally, with the ten-year bond yield domestically being no exception, rising 52 bps, back over 4% (4.05%). Ten Year Real bond yields rose by less, up 42 bps, finishing at 1.59%. This culminated in the implied inflation expectations rising 10 bps to 2.46%, reflective of a trend we expect some further pressures to the upside to in the first part of 2023. The Australian Dollar rose marginally, finishing a little over US$0.68.
Global REITs marginally outperformed the AREITs, delivering negative 3.8%. The general market (via the S&P/ASX 300 Accumulation Index) outperformed the respective REIT indices but was still down 3.3%. All sectors were negative, with both the materials and utilities sectors being the outperformers once more.
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