Investment options: Listed property

Searching for efficient diversification in a balanced portfolio, with better risk adjusted returns and income stability? Then exposure to listed property is a must!

New property listings have resulted in an increase in the size, choice, quality and liquidity of stocks in the South African Listed Property Index.

Property currently remains fairly valued relative to the bond market. STANLIB forecasts income to grow by 6% over the next 12 months, resulting in a forward yield of 8.4%. This is comfortably ahead of the 10 year bond yield at 8.15% and cash at 6%.

The correlation between listed property, equities and bonds over time (Click to enlarge image)

Realising the potential

Investing in listed property provides a solid income. This fact lies at the heart of the STANLIB Property Income Fund’s investment philosophy.

Capital growth comes over time and is subject to short-term volatility. “The bottom line, perhaps, is that listed property brings a growing income stream with bricks and mortar behind you. It is not as risky as general equities, and only slightly riskier than fixed income,” explains Alan Ehret, Director of Marketing and Business Development at STANLIB.

Exposure to listed property offers efficient diversification in a balanced portfolio, with better risk adjusted returns and income stability. Fortunately for investors, there has been a multitude of new property listings, which effectively bodes well for the property market.

Firm favourite returns

Well known to the market and a firm favourite with many investors, the STANLIB Property Income Fund has performed well in various market conditions and continues to outperform the South African Listed Property Index.

Given this performance, it’s safe to say that many investors were disappointed when the STANLIB Property Income Fund was capped last year in order to manage risk and liquidity constraints.

The great news for investors is that the fund has been reopened. “Capacity has now been created for more investors to enjoy the benefits of being invested in the award winning STANLIB Property Income Fund,” comments Ehret.

A unique investment strategy

Unlike most competitors, the STANLIB Property Income Fund employs a buy-and-hold strategy. As strategic investors - and not speculators, long-term calls are made to ensure minimal trading. Furthermore, the STANLIB Property Income Fund is a fully invested fund with cash held purely for liquidity purposes.

STANLIB’s Property franchise enjoys many benefits, leveraging off its size and reputation. “We are given priority in private placements allowing for superior pricing power,” says Keillen Ndlovu, Head of the STANLIB Property Franchise. “In addition, the STANLIB Property franchise hosts institutional and retail investments allowing for greater liquidity of assets.”