Principal allows room to move

Refusing to be pigeonholed into one management style, Principal GlobalInvestors instead labels itself an opportunistic fund manager.

This open approach has seen the Principal Property Securities Fund deliver above benchmark returns over the four years since its inception.

Its success as an investment style is also reflected by its top placing in the Australian Property Securities category of the Money Management/IMCA Fund Manager of the Year Awards 2007.

According to Chris Lepherd, portfolio manager of the Principal Property Securities Fund, this investment style is one of the factors setting the fund manager apart from its competition.

“We don’t have a strong style bind in how we manage money, so we are very opportunistic,” he said.

“You have various groups that say with strong conviction that they’re a value manager or growth manager and we see that as precluding an opportunity set in any point in time.

“We are opportunistic in our style and we do not stick to a strong value or growth bias.”

Lepherd added that the fund manager was a firm believer in active management.

“Right from the beginning we’ve believed in active management for listed property trusts … it certainly has been a sector where active management can add value and our investment philosophy has always been towards active management and our risk-adjusted returns reflect that.”

Lepherd said another advantage was Principal’s size, which he described as small and nimble.

“There are some guys out there with a lot of capital and they find it harder to trade in and out of stocks than we do, so we have been able to be very flexible and take advantage of opportunities quite quickly,” he said.

Finalists in this category were Goldman Sachs JBWere AssetManagement and Credit SuisseAsset Management.

Goldman Sachs JBWere Asset Management employs a disciplined, transparent and rigorous investment process that has successfully exploited market inefficiencies while containing risk, according to the fund manager’s head of real estate, Tim Hannon.

“This process has been instrumental in generating a long term and consistent track record of alpha generation,” he said.

Part of our competitive advantage comes from the small size of our property capability, which means the fund can be managed in a highly active manner.”