APN Asian REIT Fund

Attached is our most recently updated Fund Review on the APN Asian REIT Fund.

We would like to highlight the following aspects of the Fund;

• APN is an ASX-listed fund manager specialising in property investment, with an investment team of six. Established in 1996, APN now has FUM of $A2.4bn including four REIT (Real Estate Investment Trust) funds.
• The APN Asian REIT Fund (Fund) is a property securities fund that invests in a quality portfolio of Asian REITs, listed on the securities exchanges of the Asian Region, with the ability to hold some cash and fixed interest investments. 
• The Fund aims to deliver a competitive yield with lower risk than the market. The underlying stocks are selected based on a highly disciplined investment approach that focuses on the fundamentals and number of valuation approaches. The universe can include new IPO's, other corporate actions take place and/or corporate governance improvements at the country or REIT level bring new stocks into focus.
• The Fund provides access to a wide spread of property-based revenue streams that are specifically analysed, selected and weighted with the aim of delivering strong and sustainable income returns. The Fund is an unhedged product.
• APN's Asian REIT Fund invests in a portfolio of 25-40 listed Asian REITs with a core philosophy of investing in properties with sustainable rental income streams.
• The Fund has delivered an annualised return of 14.28% p.a., since inception in July 2011 with a standard deviation of 9.35% p.a. The Sharpe and Sortino ratios are 1.2 and 2.14 respectively.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - April 2017 (pdf format)

A Political Budget, but no long term solutions

This week's Federal Budget was generally viewed in the media as being designed as the final "cheerio" to the disastrous effort from Joe Hockey and Tony Abbott back in 2014, which was in large part the catalyst which eventually resulted in both of them losing their jobs. We don't get to see or hear too much of Joe these days, while this week (for a change) we haven't heard much from Tony either. Thank heavens for small mercies.

As far as it went this budget seemed a pretty unspectacular, reasonable and responsible document, but one has to feel alternatively sorry, or frustrated, that due to our political situation it is unlikely we are ever going to get a budget that will fix the major structural issue(s) involved: Neither side of politics seems to have the gumption, the will or the nerve to reduce the reliance on personal income tax, rather than introducing a higher, (or broader, or both) GST to bring Australia into line with the rest of the developed world.

Other targets missed would seem to be multi-nationals, particularly tech companies, but no doubt others as well, who derive significant income from Australia, but pay little or no tax on that revenue. Once again, an increase in GST would collect some, but from the consumer, not the vendor. Surely it can't be too difficult?

Raising a new tax on banks is always a good way to get on side with the electorate, as Scott Morrison was quick to point out. However, one way or the other either shareholders, or customers, or both are going to either be the loser or have to pay.

After last year's meddling with the superannuation rules, the sector was broadly left untouched this time around. However, once again where is the political will to clean up super's complexity, and REALLY encourage Australians to save for their own retirement, rather than rely on welfare? After all, that was Paul Keating's original objective of the system. And while on the subject of super, why not encourage and fund the (welcome) increase in infrastructure spending by ensuring that a portion of all super balances are allocated to long-term infrastructure projects such as inland rail or Western Sydney airport?

From the funds management perspective, there seemed little in the news, so it was left to Platinum and K2 to make headlines by cutting their management fees, presumably in the face of the ongoing pressure of investors' appetites for low cost, index based ETF's. Hedge Clippings has long held the view that provided the performance and risk profile of a fund is sufficiently attractive, fees are not the primary issue. Certainly, the current market, with volatility at all-time lows based on the VIX, is a great boon to ETF's, but those managers who can differentiate AND add real value should still be able to charge an appropriate fee.

I guess it just depends on one's view of "appropriate".

LATEST PERFORMANCE NEWS

Allard Investment Fund increased 2.23% during the month of April 2017 and is up 21.51% for the latest 12 months. Since inception in July 2003, the Fund has an annualised return of +9.34% p.a.

APN Asian REIT Fund rose 3.12% for the month of April, outperforming the Bloomberg Asia REIT Index which returned +1.98%, by 1.14%. The Fund has an annualised return since inception of +14.28% p.a.

Richard Fish may have announced his retirement, but that didn't stop theBennelong Long Short Equity Fund rising 5.84% for the month of April, outperforming the S&P/ASX 200 Accumulation Index, which returned 1.03%, by +4.81%. Since inception in January 2003, the Fund has an annualised return of +16.74% p.a.

KIS Asia Long Short Fund returned -1.59% in April, taking the return for the most recent 12 months to 8.51%. Since inception in October 2009, the Fund has an annualised return of +14.07% p.a.

Bennelong's Quay Global Real Estate Fund gained 3.89% for April 2017, outperforming the global real estate (FTSE/ EPRA NAREIT Developed Index Net TR AUD) which returned +3.11%, by 0.78%. For the latest 12 months, the Fund has returned +7.52%, taking theannualised return since inception to +15.88% p.a.

Optimal Australia Absolute Trust reported a net return of +0.07% in April 2017, to take the annualised return to 8.08% with volatility of just 3.74% since inception.

MARCH FUND REVIEWS: APN Asian REIT Fund; Optimal Australia Absolute Trust; Bennelong Kardinia Absolute Return Fund; Bennelong Twenty20 Australian Equities Fund;

And on that note, have a great weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.