SUMMARY
A-REITs outperformed again in 2024. For the year, the sector is up +17.6%, outperforming the broader market by +6.2% (S&P/ASX 300). The Fund delivered a strong return of +19.4%, outperforming the benchmark by +1.8% for the year.
A-REITs outperformed again in 2024. For the year, the sector is up +17.6%, outperforming the broader market by +6.2% (S&P/ASX 300). The Fund delivered a strong return of +19.4%, outperforming the benchmark by +1.8% for the year.
This is now the second year in a row that A-REITs have outperformed the broader equities market, with the sector up +17.2%pa over the last two years, outperforming the broader market by +5.5%pa. Typically, there is an inverse relationship between A-REIT performance and 10-year bond yields, however this has broken down recently, with the sector holding up well despite higher bond yields. Expectations of future interest rate cuts have been a key driver of this performance.
A-REITs also outperformed global REITs. Global developed market REITs returned +8.8% in 2024 (FTSE EPRA/NAREIT Index), with Australia a top performer (+10.6%) ahead of the US (+7.9%). There was a wide dispersion in returns, with the UK (-11.6%), Hong Kong (-10.8%) and Singapore (-8.3%) underperforming.
Similar to 2023, the outperformance of the A-REIT sector was driven by a few stocks – HMC Capital (HMC), Goodman Group (GMG), Charter Hall Group (CHC), Scentre Group (SCG) and Stockland (SGP). This highlights the importance of stock picking. Despite the strong sector performance during the year, most stocks underperformed both the sector and the broader market. Out of the top 5 performing stocks, the Fund held 4 stocks during the year – namely GMG, CHC, SCG and SGP. This drove the outperformance of the Fund over the benchmark for the year.
Looking ahead – key drivers for REITs in 2025:
Looking ahead, we are positive on the outlook for the A-REIT sector over 2025, particularly for select fund managers and the residential sector, as the rate cut cycle begins.
Portfolio Manager
Investment Specialist
A Property Fund focussed on capital security, income yield, and sustainable growth.
The Fund believes each security has an underlying or intrinsic value and that securities become mispriced at times relative to their value and each other.
The Fund seeks to exploit such market inefficiencies by employing an active, value based investment style to capture the underlying cashflows generated from real estate assets and/or real estate businesses.
The Fund believes that responsible investing is important to generate long term sustainable returns. Incorporating ESG factors along-side financial measures provides a complete view of the risk/return characteristics of our property investments.
The Fund is benchmark unaware. All positions are high conviction and assessed on a risk-reward basis, resulting in a concentrated portfolio of 10-20 securities.
1. Net performance figures are shown after all fees and expenses, and assume reinvestment of distributions. The Fund incepted on March 11th 2020. Index performance calculations include a complete month’s performance for March 2020. No allowance has been made for buy/sell spreads. Please refer to the PDS for information regarding risks. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
2. Inception 11 March 2020.
3. Annualised standard deviation since inception.
4. Relative to S&P/ASX 300 A-REIT TotalReturn Index.
* For further information regarding fees please see the PDS available on our website.