Vanguard leads Lonsec property securities review

Lonsec has released its 2010 Australian Property Sector Review, with the Vanguard Property Securities Index Fund the only fund of 19 reviewed to achieve the highest rating.

Three new funds were added as Lonsec noted that Australian real estate investment trusts (A-REITs) had improved steadily since the global financial crisis, returning 37.8 per cent in the 12 months to 31 May 2010.

The Aviva Investors Listed Property Fund, the Legg Mason Property Securities Fund and the Macquarie Master Property Securities Fund all received a ‘recommended’ rating.

“While all managers posted positive returns, there was quite a spread in the range of performance. The managers with broader mandates allowing allocation to smaller stocks were the beneficiaries,” said Lonsec investment analyst Thembi Matabiswana.

Recent volatility meant there was a more than 100 per cent performance difference between the top and bottom shares in the review, she said.

Capital raisings in the sector meant managers with higher levels of funds under management were able to take advantage of mispricings and arbitrage opportunities, although smaller managers were more able to move in and out of less liquid stocks and significantly able to outperform larger managers, Matabiswana said.

Lonsec also noted a significant loss of talent from the peer group, with many of the senior analysts and portfolio managers who had left the sector not being replaced with external talent, resulting in a loss of experience in the A-REIT sector.