Real assets securities opportunity & outlook

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

In today’s real estate market, different property sectors are experiencing very different patterns of returns due to Covid-19. Some sectors have thrived during the past six months, while others, such as retail properties, have suffered. 

We believe that an actively managed strategy could provide opportunities for investment in attractively priced quality real estate.

Risk. There can be no guarantee that the investment strategy can be successful, and the value of investments may go down as well as up.

Global real estate securities themes 

Real estate securities that are listed on public stock exchanges have rebounded from their March lows, but still remain around 20% lower than in February. Meanwhile, the broader real estate market has hit new highs. (Source: – FTSE EPRA Nareit developed index from 24/2/2020 to 31/8/2020) As a result, a great deal of listed real estate is available at a significant discount to private real estate.

Through our active selection process, we have been able to select securities that have benefited during the pandemic. Data centres and towers that deal with vast swathes of digital data, for example, are benefiting from long-term changes and have been seen as net winners from Covid-19, as more data is used by stay-at-home workers and consumers. 

We are also starting to invest in sectors that are facing a more volatile future, such as bricks-and-mortar retail, airports and hotels. We are of the opinion that such properties could see significant returns if we receive positive news about a Covid-19 vaccine in the coming months.

While short-term market volatility means we can pick out securities with the potential for strong returns, we do expect the market to stabilise in the longer-term. As a result, we should see real estate continue to provide attractive income and capital growth. 

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or financial product or to adopt any investment strategy. The opinions expressed are as of October 2020 and may change as subsequent conditions vary.