NZ Fund Managers

[Snoopy]

And the fund winner is.......

Listed Property Fund Manager Comparison	Fund Annual Fee	Property for Industry holding Increment	Stride Property Group holding Increment	Argosy Property holding Increment	Sum Total Percentage Point deviation from Index	Absolute Total Percentage Point deviation from Index
Free Float Index Holding for Top Eight (Reference)	Not Applicable	11.6% (base)	7.47% (base)	9.23% (base)	0.0pp	0.0pp
1/ ANZ Oneanswer (Incremental Holding to Reference)	1.10%	+3.7pp	+5.6pp	-7.2pp	+2.1pp	16.5pp
2/ Harbour Asset Management (Incremental Holding to Reference)	0.78%	+0.85pp	-1.5pp	+2.0pp	+1.5pp	4.5pp
3/ Smartshares (Incremental Holding to Reference)	0.54%	+1.4pp	+0.85pp	+1.1pp	+3.4pp	3.4pp

I have created the above table to get an inkling of where our three protagonists might be going with my three preferred unit holdings, rather than the return they gave their unit holders in the financial year just gone. This is all based around my 'future vision' in post 105. Readers may have their own future vision across the different property sectors that is different to mine. That in turn may make them look at a fund manager from their own different perspective (a perfectly legitimate thing to do) and so come up with a different 'best' manager. Nevertheless, my own judgement is what follows.

In the twelve months just gone under scrutiny, the 'best performance', was put in by Solly's Harbour Asset Management Team. This was helped by various 'one offs' like Solly's big push into logistics via GMT (which in actuality meant he just caught up to where the other fund market players were already) and a one off boost from a 32% capital appreciation (resulting in 0.66 percentage points being added over 12 months to the fund total return) from a minnow holding in Infratil. I sincerely doubt that either of these effects will be able to be repeated in the current financial year. Some say we might see a boost this year in the recovery of Harbour's Real Estate fund holdings in the three leading listed retirement villages. I think there could be a 2% total portfolio boost from such a sub sector recovery. But whether this will all occur over the 30-06-2023 to 30-06-2024 period alone is doubtful. Consequently I believe that after Solly's relatively favourable twelve months of portfolio management on behalf of investors, the current ensuing twelve months should see Solly's Harbour Asset Real Estate performance 'revert to the mean'.

My instinct in picking a winner is to go for ANZ Oneanswer, because they are the most overweight in the two property owning companies that fit into my own 'growth vision' going forwards. Interpreting from the table above, the largest potential gain will come from the 5.6 percentage point overweight holding above the 4.74% base index shareholding rate (this means that to start the year, the percentage of the portfolio in Stride is 5.6%+4.7% = a 10.3% of the ANZ Oneanswer Real Estate total portfolio stake. Nevertheless, this pumped up 10.3% stake is only 10.3% of a much larger 100% portfolio. And the 'incremental piece' is only 5.6% of a much larger 100% portfolio. Finally, any out-performance will rest on just what kind of capital gain (or otherwise) applies to that slender 5.6% of excess sized Stride stake. What I am saying here is that even with those out sized portfolio sizing decisions made by ANZ Oneanswer, a 20% advance in the share price of Stride (a quite extreme favourable performance) will only increase the value of the whole Oneanswer Real Estate fund by just over a single percentage point above fund index returns. This shows up our most independently thinking manager (ANZ Oneanswer) to still be hugging the real estate investment index remarkably closely. On a slightly different tack, I would be very interested to know why ANZ Onesaver are so negative on Argosy properties, while the other two protagonists are resoundingly positive. Don't get me wrong. If your own research says you should take a stand aside from the index, and minimise your exposure to Argosy (in this instance), then I am all for a fund manager doing just that. But I remain puzzled by ANZ Oneanswer's extremely negative views on a company with such a strong dividend yield and yet a perfectly acceptable lease rollover profile. I also have to bear in mind that the ANZ Oneanswer management charge the most of the three fund manager protagonists here for managing the portfolio of listed entities on the investor's behalf.

Finally we come to Smartshares, which, is touted as nothing more than a mimic for the NZ real estate listed index, Despite this, through a quirk of fund management policy ('the cap') , I find Smartshares overweight in all three of the property shares that I like best. This fund 'cap' prevents this fund holding more than 17.5% of its invested capital in any one listed share. That, as a result, I should find all three of my preferred investments overweight in what is ostensibly an index fund blows me away. The fact that this fund has the lowest management fees seals the deal . The Smartshares NZ Real estate fund (NPF) is my winner. Yet I still retain respect for the other two fund manager protagonists. When all managers play the 'index plus' share selection game you can almost be sure that it will be a 'photo finish' to decide the winner!

SNOOPY