Australia’s only high conviction property securities fund with an ESG focus has achieved an early ‘investment grade’ rating from Lonsec, after being launched just two years’ ago.
The Pengana High Conviction Property Securities Fund was launched by the $3.8 billion Pengana Capital Group in March 2020, and invests in a concentrated portfolio of up to 20 property stocks including some alternative property securities, and has delivered returns of 14.2% per annum since inception, compared to the benchmark’s return of 5.8% per annum for the same period.
In its review, Lonsec said incorporating ESG into the valuation process was a strength of the Fund. Lonsec added: “The Manager is differentiated by seeking out growth situations in alternative property sectors and the high proportion of ESG factors in its valuation models will favour stocks well-rated on this basis.”
Amy Pham, Portfolio Manager for the Fund, said ESG was becoming an important factor in property securities investing. “We’re not traders, we look to take a high conviction in property securities, and ESG plays a big role in forming our convictions.
“ESG is influential in valuing quality property assets, along with assessing the strength of the fund managers. There’s a strong link between ESG and performance in property.
“For example, an asset with a high NABERS rating will attract better tenants and generally have a higher occupancy rate than an asset with a low NABERS rating (NABERS measures the energy efficiency of a building).”
Ms Pham also said the Fund liked alternative real estate assets. “Alternatives provide an opportunity to invest in assets which are necessities, such as healthcare, childcare, data centres.
“These assets tend to be less cyclical and less impacted by inflation and interest rates than some other property assets.”
Amy and her team will be hosting an investor update webinar on Tuesday 17 May which will allow investors and prospective investors an opportunity to get insight into the team’s current portfolio positioning and outlook for the Australian property sector. Details on the webinar can be found at pengana.com/propertyfund or you can register here.
*Lonsec rating issued 05/2022 is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. © 2020 Lonsec. All rights reserved.
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