These days, we should try and celebrate the victories, no matter how small. The blue blocks in the chart below are one such example. They might be pointing the wrong direction, at least over the short term, but in a relative sense the APN Asian REIT Fund has weathered these last few months rather well.

Around the world, listed real estate has missed out on the V-shape bounce that the rest of the equity market has enjoyed since March. Over the last 12 months to 30 June 2020 our Fund returned -11.9%¹. Whilst any negative return is unpleasant, the APN Asian REIT Fund compares favourably to a return of -14.4% among Global REITs and the domestic AREIT market returning -20.6%. Consider this a small victory in an extraordinary time.

Source: APN and Bloomberg

The returns per annum over a two and five year period are more compelling, with the Fund outperforming on both counts. These returns were also achieved with much less volatility. At a time of market turmoil and dislocation, this is testament to the diversification of the Fund, geographically and through different property types.

Our main overweight exposures to industrial and logistics properties across the Asian region have been a key beneficiary of COVID-19 as people shift to shopping from home. Another sector benefitting from COVID dislocation is data centres.

With more users online, the reliance on digital tools for remote working, remote learning and online shopping has led to a surge in demand for data centre capacity. Along with logistics and industrial exposure, data centres is another sector in which the fund carries an overweight position. Both have been helpful to recent outperformance.

To another recent win. The APN Asian REIT Fund now sports a ‘Superior’ 4 Star rating by SQM Research². The company states that, “the Fund has an appreciable potential to outperform over the medium-to-long term. Historical performance has tended to be meaningful. PDS compliance processes are strong. There are very little to no corporate governance concerns. Management is of a high calibre.”

Zenith³, another major research house, recently rated the Fund ‘Approved’, adding to Lonsec’s ‘Investment Grade’ rating⁴. Not so long ago, some financial advisors were wondering why we launched an Asian REIT Fund. It’s gratifying that the merits of the Fund, and our track record, are now more widely appreciated.

Remaining true to label is what we do best at APN. Through the market turmoil, we believe assets with reliable income streams and genuine long term value will continue to be in demand once the crisis passes. This makes the Fund’s current yield of 6.09%⁵ compelling.

Eventually, in an exceptionally low interest-rate environment the search for yield will return. We have long believed the APN Asian REIT Fund is well positioned when that time comes. It’s good to know respected ratings agencies are also similarly inclined.

This article has been prepared by APN Funds Management Limited (ACN 080 674 479, AFSL No. 237500) for general information purposes only and without taking your objectives, financial situation or needs into account. You should consider these matters and read the product disclosure statement (PDS) for each of the funds described in this article in its entirety before you make an investment decision. The PDS contains important information about risks, costs and fees associated with an investment in the relevant fund. For a copy of the PDS and more details about a fund and its performance click here. To receive further updates and insights from the APN team, sign up for Review, our monthly email newsletter.

1. Returns after all fees and expenses. Assumes distributions are reinvested. Investors’ tax rates are not taken into account when calculating returns. Past performance is not an indicator of future performance.

2. The rating contained in this document is issued by SQM Research Pty Ltd ABN 93 122 592 036 for the APN Asian REIT Fund as at June 2020. SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale clients, utilising a proprietary review and star rating system. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. The rating may be subject to change at any time. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment scheme.

3. The Zenith Investment Partners (“Zenith”) ABN 60 322 047 314 rating (assigned June 2020 for the APN Asian REIT Fund) referred to in this document is limited to “General Advice” (as defined by section 766B of Corporations Act 2001) and based solely on the assessment of the investment merits of the financial product on this basis. It is not a specific recommendation to purchase, sell or hold the relevant product(s), and Zenith advises that individual investors should seek their own independent financial advice before investing in this product. The rating is subject to change without notice and Zenith has no obligation to update this document following publication. Zenith usually receives a fee for rating the fund manager and product against accepted criteria considered comprehensive and objective.

4. The Lonsec Rating (assigned August 2019 for the APN Asian REIT Fund) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445. The Rating is a “class service” (as defined in the Financial Advisers Act 2008 (NZ)) or is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product(s). In New Zealand it must only be provided to “wholesale clients” (as defined in the Financial Advisers Act 2008 (NZ)). Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold APN or APNFM product(s), and you should seek independent financial advice before investing in this product(s). The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the fund manager for researching the product(s) using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings methodology, please refer to our website at: http://www.beyond.lonsec.com.au/intelligence/lonsec-ratings.

5. At 30 June 2020. Current running yield is calculated daily by dividing the annualised distribution rate by the latest entry unit price. Distributions may include a capital gains component. Distributions are not guaranteed and past performance is not an indicator of future returns.