Page 180 - Profile's Unit Trusts and Collective Investments 2021 issue 2

CHAPTER 9

a negative headwind for certain fixed income securities and more beneficial for companies which
are able to pass inflation-related cost increases on to the end consumer.
Offshore investments are heavily influenced by the rand. Please give your view on the rand
over the next 1, 3 and 5 years.
Within the fund research team, we do not focus on creating our own internal forecasts for asset
classes, currencies, etc. It does not fit into our process and philosophy and we do not believe we
have a unique ability to forecast macro events. We remain informed and up to date on aspects
related to this, but it is not part of our business to generate forecasts/expectations, etc.
Our focus is predominantly on manager selection and therefore we allocate our time
accordingly. Given the large number of factors influencing currency fluctuations, we do not believe
any investor can accurately forecast currency movements consistently over any reasonable period.
However, there are some tools available (like inflation differentials and current account
balances) that can provide limited insights on the valuation level of a given currency. The US dollar
seems to have generally been quite overvalued for some time on a purchasing power parity basis,
and more recently we have seen this starting to reverse. In general, most emerging market
currencies seem to be poised to improve as the US dollar loses some of its strength, with the South
African rand specifically seeming very oversold.

Reitway BCI Global Property Feeder Fund

Sector: Global–Real Estate–General
Fund manager: Garreth Elston
Benchmark: GPR 250 REIT NET TR Index

Returns to investors 1 year 3 years
Reitway BCI Global Property Feeder Fund 7.07% 13.29%
Sector Average 7.34% 7.49%
Inflation (CPI) 4.87% 3.85%
ProfileData performance stats to 30 June 2021: CAGR with dividends reinvested
Please describe your investment universe.
We purely focus on global listed real estate and our investment universe consists of over 1 000
Real Estate Investment Trusts (REITs) and Real Estate Operating Companies (REOCs), operating
in 49 countries, denominated in 10 major currencies, and representing 25 sectors and sub-sectors.
Please comment on your investment year (July 2020 – June 2021) from a fund manager's
point of view.
Considering the volatility and challenges experienced during the period of July 2020 to June
2021 the Reitway BCI Global Property Feeder Fund delivered a robust performance. The fund
delivered a return of 7.1% versus our benchmark’s (the GPR 250 REIT World Index – net TR)
return of 11.97%. The underperformance primarily stemmed from the market's rapid rise on 9
November 2020 as a result of the announcement of the efficacy of the Pfizer vaccine. This news
saw retail and office stocks (which we were underweight) strongly outperform the general market
and continue a strong rise throughout November. Early 2021 saw the rotation into retail stocks
continue, but even with the strong improvement in retail stocks many remain below their values
prior to the Covid-19 crash of March 2020. Logistics and warehouse companies continued their
strong performance from 2020 with strong demand for new warehouse space continuing. Storage
and residential companies also saw strong performance, but as 2021 continued office companies
were negatively impacted by the global uncertainty of workers returning to the office. The fund
remains in the top quartile over 2, 3, 4, 5, 6, 7, 8 and 9 years in South Africa, as well as compared to
the full global peer fund universe over 3 and 5 years. Reitway’s sector exposure-led style resulted in
the company benefitting from our overweight exposure to logistics, data centres and residential,
and our low exposure to offices protected us from the worst performing sector of the year thus far.

178 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts